Allied Irish Banks Plc, which is being bailed out by the government, decided not to pay bonuses to certain employees following a letter it received from Irish Finance Minister Brian Lenihan.
Lenihan wrote to the lender, saying the provision of financial support depends on the “non-payment of any bonuses awarded, no matter when they may have been earned”, Dublin- based Allied Irish and the minister both said in separate e- mailed statements today.
Irish banks scrapped bonuses after the government offered in September 2008 to guarantee deposits to avert a run on the country’s lenders during the credit crisis. Allied Irish Bank (AIB) said on December 9 it was legally bound to pay about ¤39.2 million ($52 million) of bonuses from 2008. The government is preparing to take a majority stake in the bank as it seeks to raise ¤9.8 billion of capital by February.
“The board of AIB very much welcomes the actions of the minister and is relieved to be in a position not to pay these bonuses,” Executive Chairman David Hodgkinson said in the statement. Legislation implementing the proposal will be discussed by the government tomorrow, Lenihan said.
The proposal will be included in legislation relating to the country’s 85 billion-euro bailout that will be published on December 15, said Marie Mulvihill, Finance Department spokeswoman, in a phone interview.
“The bonuses are referable to a period in which the state had to provide financial support to enable the bank to meet its financial and regulatory obligations,” Lenihan wrote in the letter.