AIB seeks to break pay cap with €690k for new chief

THE acting head of AIB has said the bank could consider recommending to the Government that its new chief executive be paid nearly €200,000 more than the agreed €500,000 cap on bank executives pay.

The continuation of the cap introduced in 2009 has already been questioned by financial regulator Matthew Elderfield. The Central Bank is looking at candidates for the top job in AIB.

Earlier this year, the Covered Institutions Remuneration Oversight Committee — which advised on the initial €500,000 cap — recommended a €690,000 cap in the case of AIB.

AIB executive chairman David Hodgkinson made his reference to the recommendation while addressing a sitting of the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, yesterday.

Earlier this summer, Taoiseach Enda Kenny said the Government would need to see “an exceptionally compelling case” before agreeing to pay any new AIB chief more than €500,000.

Mr Hodgkinson also told yesterday’s meeting that AIB could begin to lessen its level of state control and move towards private ownership early next year. He said that investment interest exists amongst the private equity community.

“It would be useful to get a minority investor on board in the first instance, in order to give further confidence to market, but the Irish economy needs further recovery first.

“We have engaged with private investors, but realistically it would be the early part of next year before we are likely to engage in a meaningful way and gain the first foothold of new investment,” he added.

On the issue of mortgage relief, Mr Hodgkinson said that AIB continues to work closely with customers who cannot repay their debts. He said that the bank has written off mortgage debt in “a handful” of cases, where customers’ homes have been repossessed.

“We’re trying to keep people in their homes. We’d like to see the Department of Finance’s proposals on the matter [of mortgage relief] and for an industry-wide approach put in place.”

Mr Hodgkinson refused to rule out further mortgage interest rate movement at the bank, but said it planned to remain at the competitive end of the market.

Also addressing the same committee, Bank of Ireland chief executive Richie Boucher had to defend his position of being one of the few bank executives to remain in place following the crisis.

He refused to comment when asked about bankers’ salaries and said that Bank of Ireland does not have a policy of debt write-off.