Top executives at AIB had good reason to hope that Minister for Finance Michael McGrath would lift the €500,000 pay cap at the bank once the State’s stake fell below the key 50 per cent level.
His predecessor Paschal Donohoe’s decision last November to remove salary restrictions at Bank of Ireland — after the State sold its remaining shares in that bank — was accompanied by a statement that the same would happen at AIB and Permanent TSB (PTSB) once taxpayers’ holdings in each fell to an “appropriate level”.
Donohoe and McGrath have so far refused to be drawn on what that level should be. However, Department of Finance officials working on a banking review last year made it clear in drafts of the report that they saw that moment arriving when the State was no longer a majority shareholder in either of the banks.
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While that view had been edited out by the time the final report was published, there had been a growing expectation in banking circles in recent months that McGrath would remove the restriction once the bank escaped majority State ownership.
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That happened on Tuesday evening when McGrath sold a 5 per cent chunk of AIB stock on the market to cut the remaining holding to 46.9 per cent. But the Minister has given no indication that it plans to budge on the pay issue.
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Was he put off by Bank of Ireland’s audacious move earlier this year — only months after being freed from pay shackles — to unveil a plan to hike top executives’ remuneration in the coming years by up to 50 per cent with so-called fixed-share awards?
Or was he concerned that some of the recent focus on the RTÉ pay scandal might turn to him if he moved on AIB pay now? He is, after all, a cautious operator, according to colleagues. And he remains the bookies’ favourite (according to the latest odds from BoyleSports) to become the next Fianna Fáil leader.
Still, he has a handy excuse that taxpayers remain about €3.2 billion underwater on their €20.8 billion bailout investment in AIB. That’s after taking into account the €13 billion the State has recovered from the bank to date and the €4.6 billion current value on its remaining stake.
