SOME GOVERNMENT-guaranteed banks are making retention and contractual payments to overseas staff to secure the best prices for overseas businesses being sold to repair the lenders, the Minister for Finance has said.
In response to a parliamentary question, Michael Noonan said commission payments based on sales continued to be paid in some guaranteed banks where they were part of staff pay.
“Where the institutions are deleveraging businesses or assets at overseas locations, retention and contractual payments deemed necessary to achieve optimal results arise,” the Minister said.
The banks are selling €73 billion in loans and other assets to reduce borrowings from the European Central Bank in a deleveraging of their businesses directed under the terms of the State’s bailout by the European Union and International Monetary Fund.
Mr Noonan told Fianna Fáil finance spokesman Michael McGrath in response to his parliamentary question that no performance or contractual bonuses or deferred bonuses were paid by the banks in December 2011.
He said payments to certain staff at EBS – “described as bonus payments in the relevant contracts” – were not paid on the basis that the Government’s bank recapitalisations prohibit bonuses being paid.
Mr Noonan said that while he was “anxious for the matter to be resolved, any resolution will have to respect the parameters and conditions of the State’s investment”.
EBS staff will hold a second one-day strike on January 26th over the Department of Finance’s decision to block the payment of bonuses to about 370 staff.
The department blocked the payment under the terms of a further €13 billion recapitalisation deal for AIB, which took over EBS in July 2011.
In addition to the €73 billion deleveraging, Irish Bank Resolution Corporation is offloading and running down almost €40 billion of loans over 10 years as part of the wind-down of the former nationalised lenders Anglo Irish Bank and Irish Nationwide Building Society.
IBRC sold the former $9 billion (€7 billion) Anglo US loan book at a lower-than-anticipated discount on the face value of the loans, while AIB and Bank of Ireland have each sold overseas commercial property portfolios.
Bank of Ireland divested itself of €8.6 billion of foreign assets in 2011 at a better-than-expected average discount of 7.1 per cent.
