ALLIED IRISH Banks (AIB) has paid bonuses due for 2008 to overseas staff in the bank’s capital markets division.

The bank is understood to have decided to make the payments fearing further lawsuits from staff seeking to force the lender to pay bonuses frozen since February.

An AIB spokesman confirmed the bank had recently paid 2008 bonuses to overseas staff in the capital markets division.

“We had a contractual commitment to pay bonuses to staff whose performance in 2008 had triggered an entitlement,” he said.

AIB paid the bonuses to staff in the UK, the US and Poland and in the division’s offices in Frankfurt, Paris, Budapest, Zurich, Toronto, Sydney and Luxembourg.

The bank feared that it might lose overseas staff to competitors if the bonuses were not paid.

AIB has said that no staff in the Republic of Ireland have been paid bonuses for 2008.

The bulk of the employees in the bank’s capital markets division, which had 2,562 staff at the end of last year, are based in the Republic.

Bonuses to overseas staff were deferred following the introduction of the Government bank guarantee in September 2008.

AIB was forced to pay bonuses to two capital markets staff in New York after they took legal action.

Ronald Rapp and Douglas Marron both sued AIB seeking $315,000 (€213,000) and $185,000 respectively after the bank clawed back their bonuses just days after they were paid out in February.

AIB agreed that no bonuses would be paid to senior executives for 2008 and 2009 under the guarantee and the Government’s €3.5 billion recapitalisation of the bank.

AIB expects capital markets to make higher profits in 2009 than last year, and for the division to be the largest contributor to group profits this year.

The former head of capital markets, Colm Doherty, was appointed group managing director at AIB last month.