AIB is offering to pay employees’ golf club fees and leisure club memberships worth millions of euro every year despite being crippled with debt and facing massive job losses and a likely state takeover.
The crisis-ridden bank confirmed the generous staff perks scheme on the same day it raised interest rates for hard-pressed mortgage holders by half a percent – and just days after it announced record losses of €2 billion for the first half of the year. The interest rate hike will affect approximately 50,000 customers who hold standard variable mortgages.
All the bank’s 12,500 staff in the Republic and their 2,500 counterparts in Britain are entitled to avail of the scheme, which pays between half and all of their fees up to a limit of €2,500 every year.
Eligibility for full reimbursement rises with rank, and the only catch is that staff must pay benefit-in- kind tax.
The bank would not say what percentage of its staff takes up the offer each year or how much it costs to subsidise their after-work activities, but if half of its workforce availed of the scheme and was reimbursed half the maximum limit, that would mean an annual payout of more than €9 million.
In a statement AIB said: “Staff are entitled to claim reimbursement of one sports and social club subscription for single membership in any one year.
“The amounts vary from half to full reimbursement of the fee with an upper limit of €2,500.
“Staff members must pay full tax on all of these payments and this is deducted through the bank’s payroll system.”
It said the scheme had been in operation for many years and would not comment on whether it would be reviewed given the bank’s recent disastrous performance.
The Irish Bank Officials Association (IBOA), the union which represents workers at the bank, said most staff were eligible for only half payment of their fees, typically gym memberships, which would be worth around €300 annually before tax.
Communications manager Seamus Sheils said: “Many employers in Ireland have developed similar schemes in recent years with the aim of improving the general level of health and fitness of their staff in order to reduce general sickness levels and absence through illness – on the principle that prevention is better than cure.”
AIB is desperately trying to raise €7.4bn to secure its future and is in the process of selling overseas subsidiaries.
Even if it raises the necessary finance, which will most likely require a state injection of capital amounting to a takeover, managing director Colm Doherty warned last week that it would still need to cut jobs and branches.
Green Party senator and party chairman Dan Boyle said a figure in the region of €9m would be a “small drop” compared with the overall level of losses the bank has to deal with.
However, he said AIB does need to establish a culture of rowing back on unnecessary costs.
“The bank needs to be more proactive in identifying expenditure like this and in eliminating unnecessary expenses,” he said.
© Irish Examiner Ltd. All rights reserved