Senior AIB managers received €100k bonuses during boom

Senior managers at AIB were getting €100,000 annual bonuses during the property boom, despite the fact the lender was breaching financial regulator rules.

Fri, 24 Apr, 2015 - 01:00

Juno McEnroe

Former AIB managing director Donal Forde said problems stemmed from the scale of the property bubble and the bank had faced pressure to make profits from other competing “stellar” banks.

Mr Forde was in charge of the Irish section of the bank between 2002 and 2009, the years leading up to the blanket bank guarantee.

Some AIB managers were getting 50% bonuses for boosting loan levels and were on salaries of €200,000 or more, the banking inquiry heard.

However, inquiry chairman Ciarán Lynch pointed out to Mr Forde that, from 2006, the bank was breaching lending levels. By 2008, it was lending 360% over and above its funds, Oireachtas members heard.

Mr Forde said the bank knew it was breaching regulations but they had treated the rules like guidelines. He said AIB’s board gave no direction to stop.

He agreed with the committee it was “substantially true” that his division in AIB was largely responsible for the bank having to get a €20bn bailout down the line. “The weight of the loans that ultimately caused problems did originate in our division,” he admitted.

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Faced with accusations that AIB bankers had become property salesmen, Mr Forde outlined the bonus schemes that had existed for managers.

While managers got cash payments, staff in lower posts received share options.

He said that commentators from the IMF to the Central Bank and the OECD were all predicting Ireland would experience a ‘soft landing’.

“At no time did I have a premonition of what was going to happen,” he said. “If I did, I would have acted differently.”

He said salary levels, including his own, had been “silly”.

He also agreed there had been light regulation of lending in the bank.

Earlier, former AIB chairman Dermot Gleeson said ex-finance minister Brian Lenihan privately told him Anglo Irish Bank and Irish Nationwide should be wound down.

AIB officials left Government Buildings on the morning of the guarantee at 3.30am thinking only four of the six banks would be guaranteed. Mr Gleeson said it was “extremely regretful” since the guarantee €20bn of public funds had been put into AIB. He apologised for the bank’s failings, adding: “There’s no excuse.”