AIB candidates not discouraged by €500,000 pay cap - Lenihan

EXTERNAL CANDIDATES were discouraged from taking the top job at Allied Irish Banks (AIB) by the general hostility towards bankers and negative publicity surrounding Irish banks, rather than by the €500,000 pay cap, Minister for Finance Brian Lenihan said.

Speaking before the American Chamber of Commerce’s annual Thanksgiving lunch, Mr Lenihan said the Government salary limit was not a serious factor in AIB not being able to recruit an outside candidate as chief executive. “The general cultural hostility to bankers and the waves of publicity surrounding banking in Ireland were an issue in losing two crucial candidates in the last year,” he told reporters.

AIB appointed senior executive Colm Doherty as managing director and the bank’s chairman Dan O’Connor as executive chairman after an outsider, the Government’s preference for chief executive, could not be found.

Responding to comments from Bank of Ireland that it would not need any further capital from the Government, the Minister said he was “glad to see their optimism”.

Mr Lenihan said the Government had to be “exceptionally careful” on the question of whether it would raise taxes in the forthcoming budget. “When investors make decisions about what countries they want to base themselves in, they look at the tax rates in those countries. We have attracted a lot of US investment – the priority of the Government is to hold on it and build on it.”

Exports by US firms in Ireland had not declined during the recession, Mr Lenihan said, and exports were “sustaining us through a very difficult economic time”.

Dr Paul Duffy, president of the chamber, said Ireland had become “an unattractive location” for high earners. “The wrong tax choices will not only deter talent but will drive away what we already have,” he said in a speech at the lunch.