Bollitics - Ireland, the Euro and the future of the EU

[snowychap]

And you didn´t care

I think you might need to qualify the 'you'. :winkold:

[DanishVillan]

Yeah sorry, the guy who stole your gold

[villa89]

For those down south - are AIB still up shit creek?

Yes, they are (or will be) 99% state owned.

[ONO]

Allied Irish Bank will spend almost 40m euros (£33m) on bonuses for its executives this month, despite being on the brink of another bail out from the Irish government.

According to the Irish Independent, about 2,400 staff will receive cheques for a deferred 2008 bonus on 17 December. Those who are contractually entitled to the payment will pocket an average of €16,700 (£14,000) each.

The bonuses were withheld in 2008 as part of the Irish government's bank guarantee scheme.

They are now being paid out as a result of trader John Foy's successful legal action against the bank, which resulted in it having to pay him a deferred bonus of 161,000 euros (£134,000).

As many as 90 employees in AIB's capital markets division have issued similar legal proceedings in the courts claiming the bonuses were agreed before the economic crash.

Last year staff received 54.9m euros (£45m) in bonuses.

'Bail out'

The move is likely to enrage members of the public and the bank's shareholders, who have watched share prices tumble from 23.95 euros (£20) to just 50 cent in the last two years.

AIB has already received 3.5bn euros (£2.9bn) of Irish tax-payers' money as part of a bail out package from the government and is set to receive a further cash injection from a 10bn euros recapitalisation fund.

Barry O'Leary from the Industrial Development Agency (IDA) in Ireland labelled the pay-out "bizarre".

He said he wished the IDA had that sort of money to repair the country's tarnished reputation on the international scene.

The bonus payout is a significant chunk of the bank's market value these days, with the stock exchange estimating its total value at 540m euros (£45.2m).

The move comes just one day after the Republic's finance minister, Brian Lenihan, said he thought it was unlikely bonuses would be paid out for some time at the banks.

He said until the banks were profitable again and made a "return'' to the taxpayer, he did not think any bonuses would be sanctioned.

Critics of AIB have accused it of being arrogant and in denial throughout the Irish financial crisis.

In July 2008, as the storm clouds were gathering, the bank chose not to conserve capital but instead announced a 10% dividend payout saying its "funding and capital positions are expected to remain robust".

Then finance director John O'Donnell said: "Even in a very, very stressed position, we would not anticipate that our dividend would be threatened or that we would have to go to our shareholders."

By October, AIB'S chief executive Eugene Sheehy went even further saying he would "rather die than raise equity".

Honestly; you could not make this stuff up.

[tonyh29]

Does that mean Iceland can pay off it's debt to the UK now ?

seems I owe Icleand an apology :-)

Iceland has agreed to start repaying the £2.3bn of debt it owes Britain from 2016 following the failure of its Icesave bank two years ago.

[Gringo]

Hi ho, hi ho, it's off to singapore we go

Bankers' bonuses to face strict limits in Europe

European regulators have confirmed tough restrictions on the bonuses that banks can pay their staff.

Only 20-30% of bonuses can be paid in upfront cash, according to new guidelines announced by the Committee of European Banking Supervisors (CEBS).

The rules are much tougher than those agreed by the G20 countries, raising fears that bankers may emigrate to more lightly regulated countries.

The bonus limits will apply to the entire global staff of European banks.

However, non-European banks will only face restrictions on what they pay staff working for subsidiaries based in the European Economic Area (the European Union plus Norway and Iceland).

[Awol]

Hi ho, hi ho, it's off to singapore we go

Bankers' bonuses to face strict limits in Europe

Oh dear. Bye bye City of London, hello Qatar, Abu Dhabi, Bahrain etc. I'm not against doing something about bankers bonuses at all, but unless that agreement is global then as you say we're simply driving away a massive source of tax revenue to countries who will welcome HSBC et al with open arms.

EU mongtards strike again.

[drat01]

Jon you really do love to overreact mate. and I love the fact that how you say you want something done about bankers bonus's but when something is done it's the EU's fault. Can you imagine if the UK was outside the EU. We impose a rule on these banker's bonus's and the EU didn't. We then have the situation that they just go the few miles across the channel and use Frankfurt, how would that help this country?

The banking sector are setting up in various hotbeds all around this ever changing world. When I was in HK recently the feeling regarding "the bank" as they call it was that they would see more of its core operations "coming home", but the need for a massive presence in Europe was and always will be there, due to many factors not less time zones, industry, infrastructure etc.

I am intrigued as to what you would do then to as you say "doing something against the bankers" but keeping them happy to continue to take the piss in their happy way.

[Awol]

Jon you really do love to overreact mate.

and you love to patronise, but moving on..

I love the fact that how you say you want something done about bankers bonus's but when something is done it's the EU's fault.

Did you actually read my post? Any solution has to be agreed globally or the banks will simply move, driving away what is currently a central plank of the tax revenue to UK Plc.

Can you imagine if the UK was outside the EU. We impose a rule on these banker's bonus's and the EU didn't. We then have the situation that they just go the few miles across the channel and use Frankfurt, how would that help this country?

Why would we do something so incredibly stupid, I've suggested nothing of the sort. The regulations are coming from the EU, not the UK Government.

I'd suggest were we not in the EU and these rules were imposed by Brussels then we'd see Frankfurt's business moving here, creating jobs, tax revenue etc. Of course that would be terrible..

The banking sector are setting up in various hotbeds all around this ever changing world. When I was in HK recently the feeling regarding "the bank" as they call it was that they would see more of its core operations "coming home", but the need for a massive presence in Europe was and always will be there, due to many factors not less time zones, industry, infrastructure etc.

Yes, and from the article Gringo linked:

non-European banks will only face restrictions on what they pay staff working for subsidiaries based in the European Economic Area (the European Union plus Norway and Iceland).

So by relocating their core operation to an area without the bonus restrictions then core staff outside of Europe (who currently would be working in London) still get paid bonuses without EU inerference and we lose the tax take from them (keeping their workers happy) and indeed from the banks total operations as they would pay their - probably lower - corporation tax in their new location.

itrigued as to what you would do then to as you say "doing something against the bankers" but keeping them happy to continue to take the piss in their happy way.

As I wrote in the first post you replied to, the situation needs to be legislated for globally or any punative action taken locally is simply shooting yourself in the foot financially. As you are so keen to remind everyone it is a globalised world out there.

[Meath_Villan]

The head of the toxic bank anglo says the money to go to the banks in the bailout wont be enough as no one NO ONE figured in that people will default on loans and mortgages ......D`OHHHHHHHHH

[Corcaigh]

Let us spare a thought for those less fortunate then us - the staff of AIB. Looks like they won't be getting their 2008 bonuses afterall.

AIB has decided not to pay some €40 million in backdated bonuses to staff following a letter from Minister for Finance Brian Lenihan.

The bank’s board met earlier this evening to consider Mr Lenihan’s letter which warned the bank that further State support would be conditional on the non-payment of bonuses awarded, no matter when they had been earned.

The minister’s letter to the board stated that without the State support which had been provided in a variety of forms, AIB could not have survived until now.

The bank had previously claimed it was under legal obligation to pay bonuses due to certain employees.

But in a statement this evening, the bank’s board said AIB had considered the minister's letter and decided not to pay the bonus payments.

The executive chairman of AIB, Mr David Hodgkinson, said “The board of AIB very much welcomes the actions of the minister and is relieved to be in a position not to pay these bonuses.

“We are determined to position the bank to play a full role in the recovery and development of the Irish economy. In doing so, we are committed to treating our customers, staff, the taxpayer and the public in a fair and transparent manner,” he added.

Welcoming the decision, Mr Lenihan reiterated his “total confidence” in the executive chairman and the board of the bank.

“I appreciate that AIB was not in a position to put up a sworn defence in the High Court proceedings and that the executive chairman and the board have acted with complete propriety in this matter."

Legislation implementing the proposal would be discussed by Government tomorrow, Mr Lenihan said.

Taoiseach Brian Cowen said earlier the Government was looking at all options available to prevent the payment the bonuses to AIB staff.

The High Court last month ordered that AIB would have to pay backdated bonuses to some staff after the bank failed to enter a defence against a case taken by trader John Foy.

However, Opposition politicians yesterday said the Government should stop the payments and should sack the board of AIB.

Mr Cowen said the Government was “looking at everything” to see if it could prevent the payments.

“We’ll have a Cabinet meeting tomorrow and see, as a result of inquiries further over the weekend, whether anything further can be done over and above what we’ve clearly pointed out, which is, from a personal point of view, from a Government point of view, we’d rather these weren’t taken up,” he told reporters at a meeting of the British-Irish Council in Douglas in the Isle of Man.

Minister for Energy Eamon Ryan said the payments were not “appropriate” under the current circumstances. “We’ll have to look at whatever different ways we can to see if that can be changed,” he said.

Minister for Health Mary Harney said it was a “pity” AIB had not contested the case taken by Mr Foy to force it to pay €40 million in backdated bonuses.

Speaking in Dundalk, Ms Harney said it would have been better if the case were fought but she understood “different legal advice" had been given to the banks.

“But clearly the bank’s ability pay has to be very much in doubt given the state of the bank and the huge amount of capital put in by the exchequer, on behalf of the taxpayer,” she said.

“At a time when the exchequer is putting huge amounts of money into AIB, people need to be mindful of their responsibilities - that applies to management, those on the board and the government.”

Ms Harney said she hoped the Government would win the Dáil vote on the EU-IMF bailout on Wednesday.

“Member of the government will support it and I believe we have the support of independents. It is unfortunate that the opposition parties are not going to give their support,” she said.

“This arrangement is essential for the functioning of this country, last year we had to borrow €19 billion more than we raised in taxes to run the country, to pay doctors, nurses and teachers. We don’t have the capacity to raise that money, we do need outside help," she said.

"It was regrettable that we had to get that help but we’ve got it now and we have a programme for the next four years and I believe there’s a responsibility on everyone elected to the Dáil to take that responsibility seriously and to support that vote when it comes before the Dáil on Wednesday."

Last week, Mr Lenihan announced that 90 per cent of bonuses paid to bankers would be recouped by the exchequer in tax after it emerged AIB staff would share tens of millions in bonuses for 2008.

Mr Hodgkinson had said the payments reflected AIB’s past and was “not the way we intend to conduct ourselves in future”.

Mr Lenihan said in a response to a parliamentary question that some 2,869 AIB employees were paid €58.65 million in deferred bonuses this year and last year.

Some €35.5 million was paid this year following legal action and a further €3.7 million was paid to staff in AIB Capital Markets in respect of deferred bonuses relating to work in 2006 and 2007. Some 62 executives shared €11.11 million, or an average of €179,000 each, for 2009, while 674 managers shared €30 million or an average of €44,000 each.

http://tinyurl.com/283ufo9

Poor lambs :oops:

[CVByrne]

I work in that Division and was due to get that bonus. It's understandable that they were cancelled, I thought they had been until the traders took that court case. Bit harsh that ordinary workers on 25k and 30k working in the bank get villified and now have the bonus taken away. It should have been paid for people on low salaries, some of them needed that I'd say, especially with redundancies coming in a couple of months. Me though, it's just money. It'd have gone into a savings account like most of my money does.

It'll be very interesting in work tomorrow. Could the traders walk out? I've no idea what is going to happen. Will be interesting day alright. I'll let you know how people take it. Me though, I will be in at the normal time and do my work.

[Corcaigh]

Call me old fashioned but surely, irrespective of which division did what, if a bank collapses in a manner such as the Irish ones did, then the idea of bonuses being paid out to anyone is a complete nonsense.

However, seeing as fingers Fingleton hasn't paid his bonus back like he said he would, then i'd probably be a bit peeved if i were an AIB employee due a bonus.

[peterms]

I love the use of the word "earned" in relation to bank bonuses.

But on this point:

The bank had previously claimed it was under legal obligation to pay bonuses due to certain employees.

But in a statement this evening, the bank’s board said AIB had considered the minister's letter and decided not to pay the bonus payments.

The executive chairman of AIB, Mr David Hodgkinson, said “The board of AIB very much welcomes the actions of the minister and is relieved to be in a position not to pay these bonuses.

“We are determined to position the bank to play a full role in the recovery and development of the Irish economy. In doing so, we are committed to treating our customers, staff, the taxpayer and the public in a fair and transparent manner,” he added.

I see that another bank (English) made it plain a few weeks ago that they thought most of their staff were entirely undeserving of bonuses, but the culture of giving bungs had taken root to such an extent that no one player could buck it. For that reason, they were hoping the govt would tell them they couldn't pay.

What a state of affairs, when the most incompetent institutions on the planet suck up so much of our money, and at the same time are so in thrall to their staff that they pay them money for nothing and seek external help in not doing so. Utterly, totally, mad. And these people have hoovered up an amount of money equivalent to the total spend on pensions, the NHS, defence, and third world debt. For nothing. Absolutely nothing.

[snowychap]

Call me old fashioned but surely, irrespective of which division did what, if a bank collapses in a manner such as the Irish ones did, then the idea of bonuses being paid out to anyone is a complete nonsense.

Whilst that's the moral case, I'm assuming that the people who went to court and won did it on the basis of it being a contractual commitment from the bank.

Apart from the opprobirum of the public, what is to stop other employees from pursuing their cases? An edict issued by a minister of state isn't going to affect the legal position, is it?

Indeed, it would appear to be a slightly dangerous precendent to set - that a government can interfere, retrospectively, in contracts between legal entities.

[CVByrne]

Oh I fully understand that, but it's not as simple as that. Nothing ever is. Think about a car sales man, he gets commission for every car he sells. Which means he will work hard to sell as many cars as possible as he'll earn more money. Same principle works with the traders. They get a extra money for earning more money for the bank. If there is no incentive then why take a risk.

You have to remember that Capital Markets division has made €300mil for the past 3 years. Proper physical money, no property loans, no loans at all. FX deals, tradeable bonds etc.. Would the division have made that money if there were no bonuses? No it wouldn't, so that money would have to have come from the tax payer due to the bank being wreckless lending by another division

It's hard for a non banking person to understand that the property lending bank and the capital makrets bank are entirely different entities. But they are. So people in Capital Markets loath the other division more than anyone else, that's the cancerous part that has ruined the hard work of another.

But in reality, you can't be paying bonuses in this climate. Regardless of anything. I'm personally not peeved about this. The whole thing is and was out of my hands, whatever happens happens. But I've never been one to spend money, so not getting more of it really won't effect my life.

[snowychap]

If there is no incentive then why take a risk.

Thus, the bigger the incentive, the bigger the risks taken. The bigger the risks, the more possibility that things will go tits up.

You don't make a moral case for gambling by saying that you win all the time.

[CVByrne]

Some €35.5 million was paid this year following legal action and a further €3.7 million was paid to staff in AIB Capital Markets in respect of deferred bonuses relating to work in 2006 and 2007.

Some 62 executives shared €11.11 million, or an average of €179,000 each, for 2009, while 674 managers shared €30 million or an average of €44,000 each.

See the numbers here, all the money is top loaded. 11.1mil to 62 execs and 30mil to managers. = 41.1mil. Not only when you move further up does your wage increase but the % of your wage you got in a bonus increases.

I can tell you, the economic crisis has really shown the culture of the management in the bank. It stinks. It's mildly satisfactory to see the deck of cards come down.

[CVByrne]

If there is no incentive then why take a risk.

Thus, the bigger the incentive, the bigger the risks taken. The bigger the risks, the more possibility that things will go tits up.

You don't make a moral case for gambling by saying that you win all the time.

Oh I agree, excessive risk taking is what got us into this.

But you can see how rather frustrating this whole situation is for my department, which is the risk department in AIB Capital Markets a division that has never made a loss and have to be fair to us, been excellent managers of risk.

It's the correct level of risk management that is required. The bank has to take risks, every time a loan is given out it's a risk.

[peterms]

Some €35.5 million was paid this year following legal action and a further €3.7 million was paid to staff in AIB Capital Markets in respect of deferred bonuses relating to work in 2006 and 2007.

Some 62 executives shared €11.11 million, or an average of €179,000 each, for 2009, while 674 managers shared €30 million or an average of €44,000 each.

See the numbers here, all the money is top loaded. 11.1mil to 62 execs and 30mil to managers. = 41.1mil. Not only when you move further up does your wage increase but the % of your wage you got in a bonus increases.

I can tell you, the economic crisis has really shown the culture of the management in the bank. It stinks. It's mildly satisfactory to see the deck of cards come down.

Also, as you move up, so does your degree of culpability for the total **** mess that the Irish people will be bailing out for decades.

Far from receiving bonuses, these people should count themselves lucky not to be kneecapped.