A GROUP of staff within the capital markets division of Allied Irish Banks (AIB) have taken legal actions against the bank over the non-payment of bonuses relating to their performance for 2008.

Up to 90 employees have issued legal proceedings in the Circuit Court and High Court seeking their 2008 bonuses, which were withheld under the Government’s September 2008 bank guarantee.

The employees claim they are contractually entitled to the bonuses in the action. The claims are not thought to exceed €10 million in aggregate terms.

The dispute began early in 2009 when staff were told their 2008 bonuses were being deferred.

AIB ceased paying bonuses after a Government-appointed committee recommended that no bonuses be paid for 2008 and 2009. However, the bank paid “contractual bonus entitlements” for 2008 to overseas capital markets staff and other foreign units after staff sued the bank in the US.

Employees of the capital markets division in Ireland were told on various occasions since early 2009 that the bonuses were being deferred. Recently they were informed that the bonuses were being deferred indefinitely, prompting the legal actions.

Some 25 staff have so far taken actions in the High Court, which deals with claims greater than €38,000; the remainder have been issued in the Circuit Court.

AIB, which is being represented by Dublin legal firm Byrne Wallace, declined to comment. Peter McInnes, a partner at Dublin law firm McDowell Purcell, which is representing the AIB employees, had no comment.

Most of the High Court actions were filed on July 13th; a handful were initiated earlier this month.

The action taken by an AIB foreign exchange options trader, John Foy, is being used as a test case as the actions are broadly similar, although the sums claimed vary. Mr Foy’s case is scheduled to come before the Master of the High Court on November 3rd in a motion for judgment application.

The number of actions is understood to be increasing as aggrieved staff join colleagues in seeking bonuses. AIB has also not paid the staff bonuses for 2009 but may be forced to pay bonuses for that year should the actions be successful.

While AIB scrapped bonuses for senior executives after the bank guarantee, many of these were discretionary payments. Most capital markets employees have contracts entitling them to bonuses.

The division, which was led by Colm Doherty until he was appointed AIB managing director last year, has been consistently profitable through the banking crisis, despite the overall AIB group making losses in 2009 and for the first six months of 2010.

The unit, which is now managed by Jerry McCrohan, reported profits of €585 million in 2008, €531 million in 2009 and €134 million in the first half of this year.

According to Department of Finance records released to The Irish Times under the Freedom of Information Act, AIB lobbied successfully in 2009 to pay bonuses where staff had contractual commitments and the bonus payments related to performance, and where the bank had “market competitive key employees”.

“There are particular difficulties in relation to employees in the capital markets area especially those located outside of Ireland,” said the department in a note of a July 2009 meeting with AIB. “Headhunting of key personnel is also happening.”

Minister for Finance Brian Lenihan subsequently agreed to bonuses for AIB staff with pre-existing contractual rights.