AIB ‘open’ to seeking pension payback from former directors

AIB is considering writing to former directors and asking them to voluntarily repay part of their pension entitlements.

When tackled at the bank’s AGM yesterday on the subject of pension payments to directors who were in charge of the company at the time of the banking crisis, executive chairman David Hodgkinson said he would be “open” to writing to certain directors seeking voluntary repayments. However, he stressed that the bank was not legally obliged to force former managers to pay back pension payments.

Shareholders were told, however, that no outstanding loans to former directors are currently in arrears and all are fully performing.

At a relatively low-key meeting, Mr Hodgkinson also reported the levels in AIB’s retail mortgage book in “forbearance” had reached 16%, up from the 15% level reached at the end of last year. This figure takes in both AIB and EBS loan books. The bank expects that arrears levels to slow down but still rise this year before stabilising and possibly beginning to decline next year.

Shareholders were also told no action has been taken on removing loss-making tracker mortgages from AIB’s books and moving them into an asset management company, such as the Irish Bank Resolution Corporation.

“The trackers are loss-making, so anything that can be done would be welcome, but I’ve nothing concrete to say, at this stage,” said Mr Hodgkinson.

He also suggested that, although management was engaging with potential investors, breaking away from State ownership remains some time off. However, he reiterated that the bank aims to be profitable again within two years.

“We’ve made very significant strides towards changing the organisation and we’re very keen to get new investors on board,” he said. “But, in order to do so, we need to be an investable option and, at present, we’re not.

“I remain realistic about the continuing scale of the challenge to return to viability and the time it will take us, but I am confident that our efforts will, ultimately, be successful.”

In response to a shareholder’s question about lending to the agri-sector, the bank’s chief executive, David Duffy said that AIB aims to be the most significant lender to the sector in the coming years.

He said the bank is currently lending around €2bn to the industry and is working closely with the Department of Agriculture on a number of new products and policies.

Management added that the bank remains on course to meet its €3.5bn lending requirements for the current year, and is in the process of recruiting a number of additional non-executive directors to its board.