Lenihan denies breaking wage cap for bank chief

Finance Minister Brian Lenihan today insisted he has not agreed a wage deal for the new Allied Irish Bank chief in breach of a Government salary cap for bankers.

AIB plans to appoint an insider as its head with a contract exceeding the €500,000 limit on top bosses’ pay.

The salary of senior executive Colm Doherty would remain at €633,000 if appointed managing director – €133,000 above a Government imposed cap.

Under the rules of a €3.5bn state prop-up for the bank Mr Lenihan insisted chief executives’ wages should be limited to €500,000.

AIB declined to comment, but the Department of Finance said Mr Lenihan was asked to sign off on the salary but has not yet approved it.

“Any suggestion that the minister has is inaccurate,” a Department spokesman said.

Opposition parties said it showed there was no change in the top ranks of the country’s banks.

Joan Burton, finance spokeswoman, said: “AIB’s determination to appoint an insider to the top position is a reflection of the fact that little has changed at the top in the banks.

“Despite the enormous damage to the economy and cost to the taxpayer they want to return to business as usual as quickly as possible.

“And it appears that the Government is going to let them get away with it.”

Mr Doherty, the head of the bank’s capital markets division, is already earning the six-figure sum.

While appointed managing director it is understood he will assume the duties of chief executive as that position remains vacant.

Former AIB chief executive Eugene Sheehy stepped down last April.

Under the management shake-up chairman Dan O’Connor will also take on the role of executive chairman, continuing his salary of €390,000.

Fine Gael branded the revelations nauseating.

Leo Varadkar, enterprise spokesman, said: “What we’re seeing now is that instead of senior executives being punished for actions, essentially they’re being rewarded.

“All this is going to do is add to the public anger and add to public cynicism.”

Independent Senator Shane Ross said he was shocked.

“Throughout this crisis the banks have scored victory after victory over the cabinet,” he said.

“The concept of culture change is a fiasco, it’s just not happening.”

Mr Lenihan announced last March he wanted a €500,000 cap on top executives’ wages at banks guaranteed by the state.

Mr Varadkar claimed AIB was giving two fingers to the taxpayers and the Government by ignoring the salary cap.

“The ink has not even dried on the Nama legislation and already Ireland’s largest bank is behaving like a law unto itself,” he said.

“The banks are showing that in spite of being bailed out with billions of euros from taxpayers, the fat cats are still putting their own greed ahead of the country’s need.”

The enterprise spokesman also said the decision to combine the executive and chairman’s roles in the appointment of Mr O’Connor was bad corporate governance.

“I note that Mr Lenihan claims he has not approved these arrangements,” Mr Varadkar said.

“However, he has accommodated every demand from the banks to date, from the bank guarantee onwards.

“Brian Lenihan is the bankers’ man in Leinster House. He must now refuse the appointment and the salary level.”