AIB to cap bonuses at €12,700 and launch group-wide health cover

AIB said on Thursday it would cap cash bonuses at €12,700 and introduce healthcare benefits for all employees in 2024 after the Government decided last year to relax crisis-era remuneration across bailed-out lenders.

“While variable pay for Irish banks is currently restricted by Government to a maximum of €20,000, variable pay in AIB will amount to no more than 5 per cent of the employee’s salary, up to a maximum of €12,700 per employee, and will be subject to group performance conditions being met,” the bank said.

“These include group financial performance, customer satisfaction levels, green lending targets and employee gender balance.”

An employee would need to have a salary of €254,000 to reach the 5 per cent maximum bonus payout level, meaning it is out of reach for most staff.

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The bank also said it will would offer healthcare benefits to all employees in the Republic and Northern Ireland, through VHI and Bupa, respectively, for the first time from next year.

“The introduction of healthcare is a very significant step forward and a demonstration of our continued commitment to providing a supportive workplace in AIB,” said group chief people officer David McCormack.

[ AIB ups forecasts as first-half profit soars amid rising rates ]

Billy Barrett, senior industrial relations officer with the Financial Services Union (FSU), said an “ordinary bank worker on a starting salary of €30,000 can receive health insurance worth up to €1,450 and a variable pay amount up to €1,500″ as a result of the new policy.

The first bonus awards since before the financial crash will be paid out early next year, based on the bank’s performance for 2023.

AIB said in August it expected its net interest income to exceed €3.3 billion in 2023, compared with last year’s out-turn of €2.16 billion, as it continues to benefit from rising central bank rates and the acquisition of loans from Ulster Bank.

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A spokesman for the bank declined to comment on when it may revise its bonus policy in the future.

Its main rival, Bank of Ireland, said in February that it would introduce a staff bonus scheme next year, with maximum awards set at 10 per cent of an employee’s salary, and capped at the Government’s new limit of €20,000. PTSB has not yet outlined its future approach to variable pay.

The Government lifted a general pay gap at Bank of Ireland last year as it sold its remaining shares in the lender. AIB and PTSB, in which the State continues to hold large stakes, remain subject to executive limits of €500,000.

AIB said has taken a number of actions to support staff in meeting the increased cost of living in recent times, including an agreement last year with the FSU to pay a 10 per cent increase over three years for non-manager employees. It also raised its entry-level salary in the Republic to a minimum of €28,000.