THE REPUBLIC’S biggest bank provided for impairments of €1.822 billion in 2008, compared to €99 million a year earlier.

According to AIB’s annual report, the bank has made provisions for loan impairments of €1.822 billion for last year, or 1.37 per cent of average customer loans.

This compares to a rate of 0.09 per cent in 2007 and reflects “the serious deterioration in the construction and property sector”, the bank said.

In addition, the bank wrote off €29 million in financial assets for sale last year, compared to €1 million written off in 2007.

The annual report also showed that chairman Dermot Gleeson waived 8.7 per cent of his annual fee last year. This amounted to €45,000.

He has increased the waiver this year so that it will amount to an overall salary reduction of €130,000.

Chief executive Eugene Sheehy waived 10 per cent of his salary from October 1st, 2008, which amounted to €23,210 last year.

He has increased this waiver to 25 per cent, which represents a yearly salary reduction of €232,100.

Mr Sheehy received a total remuneration package of €1.152 million last year, but was not paid a bonus.

No salary increases were granted to the executive directors in 2008, nor did they receive bonuses.

This compares to 2007 in which executive directors received bonuses totalling €2.85 million, €850,000 of which was paid to Mr Sheehy.

According to the annual report, this year there will be no salary increases for executive directorsor members of the group executive committee either.

Non-executive directors waived 10 per cent of their fees late last year, and increased this to 25 per cent from February 9th.

More generally, no awards will be made under the bank’s performance share plan, share option scheme or employee’s profit sharing scheme in 2009.

According to the bank, it is co-operating with the Covered Institution Remuneration Oversight Committee (Ciroc), which is appointed by the Minister for Finance, Brian Lenihan.

The bank will consider Ciroc’s report on the remuneration plans of senior executives of the Irish banking institutions.

Within the bank’s capital markets business, the investment banking division was hardest hit, with pretax profits falling 72 per cent on 2007 levels. This represented a fall from €128 million to €37 million.

The bank said that this division was particularly affected by declining values in most asset classes.

This resulted in “lower trading, corporate finance, asset management and stockbroking income”.

In the bank’s shareholders report, chairman Dermot Gleeson said that he expected the operating environment to remain extremely difficult throughout 2009.

He warned that a prolonged economic downturn would reduce the “recoverability and value of AIB’s assets”, and require an increase in the group’s level of provision for impairment losses.

The company’s agm takes place on May 13th at its head office in Ballsbridge.