Letter to AIB
Dear Mr Hodgkinson,
As I have already indicated, I am extremely unhappy at the prospect of substantial sums being paid in bonuses to AIB staff. I am aware that those claiming the bonuses did so under the terms of their employment contracts. However, it is obvious that the situation of the bank has changed drastically since the period in which the bonuses were supposedly earned and indeed that the foundations of the bank’s problems were laid down in that and earlier periods.
Furthermore, the bonuses are referable to a period in which the State had to provide financial support to enable the bank to meet its financial and regulatory obligations. The financial difficulties of the bank were clearly a supervening event which was not contemplated at the time of any agreement in relation to bonus payments.
You will be fully aware of the extent to which State support, in a variety of forms, has already been provided, and of the fact that without such support AIB could not have survived until now. I am sure you are also conscious, as I am, of the urgent need for further support, on an enormous scale.
Without such support, these bonuses clearly could not be paid. Furthermore the bank could not have continued to operate without this financial support and the employees claiming the bonuses would almost certainly have had their employment contracts terminated.
Keeping systemically important banks functioning is not something that is done in a vacuum, and State support since the crisis began has been provided subject to various conditions. Those conditions were designed not only to achieve important economic and financial outcomes but to demonstrate to the Irish public, who must ultimately fund the support being provided, that their interests are being taken into account by the Government and the banks. Without a measure of public acceptance, no Government could provide support for the banks on the scale needed.
Accordingly, I wish to inform you that the provision of further State funding to AIB will be conditional, inter alia, on the non-payment of any bonuses, no matter when they may have been earned. As AIB could not be in a position to pay without State support, past, present and to come, I believe that this condition is reasonable and proportionate. Nothing in this letter is intended to prevent the bank meeting its obligations on foot of a Court Order already obtained.
Yours sincerely,
Brian Lenihan TD
Minister for Finance