Taoiseach Enda Kenny has appeared to rule out the Government agreeing to AIB’s request to breach the €500,000 cap on bankers’ pay for its new chief executive.
In the Dáil this afternoon, Mr Kenny repeated the assertion he made in Galway yesterday that it would have to be “a truly exceptional case" to warrant breaching the cap, which has been in place since March 2009.
"I have not seen any evidence of any exceptional case," he added.
“The cap was put in place for very good reason,” he said. “No good reason has come across my desk as to why that should change.”
Mr Kenny said he extended courtesy to everybody when receiving a request. “I would like to see and hear from the Minister for Finance the case being made by the bank in question," he added.
He was replying to Sinn Féin leader Gerry Adams, who referred to the “awful distress" facing people, adding that the AIB "had a cheek" to make the request.
Mr Adams said that when he had questioned him on May on the issue, the Taoiseach had not ruled out the possibility of AIB breaking the €500,000 cap. Mr Adams described the salary as an "obscene" amount of money to pay anybody.
Mr Adams urged Mr Kenny to tell the AIB and the Dáil that the Government would, under no circumstances, allow the cap to be breached.
AIB is 98 per cent owned by the State.
The Taoiseach, speaking in Galway yesterday, said Minister for Finance Michael Noonan would report to Cabinet colleagues on the application lodged by AIB.
Over the weekend, Mr Noonan disclosed that he had received a formal request from the bank on lifting the salary cap. He said lifting the cap could only occur if an exceptional case was made. However, he did not categorically rule it out.
Mr Kenny said yesterday he and his Cabinet colleagues would await Mr Noonan’s assessment of the request before committing itself to a position. Fine Gael, while in opposition, argued that the salary cap for chief executives of bailed-out Irish banks should not exceed €250,000.
Fianna Fáil finance spokesman Michael McGrath said yesterday he was disappointed at Mr Noonan’s response and would have expected him to instruct AIB to appoint a new chief executive within the salary cap.
Mr McGrath, speaking on RTÉ, said it was important that the bank found the best possible candidate to restore it to profitability and return some money to the taxpayer. He said even with a cap on the salary, other benefits would bring the overall remuneration package of a chief executive to close to €1 million.
“When you consider the real hardship that Irish families are facing today and consider the money that has been put into that bank, then AIB should find somebody willing to be paid €500,000,” he said.
A number of prominent Labour members also warned about the consequence of exceeding the cap, signalling that there would be tensions within the Coalition if the Government acceded to AIB’s request.
Dublin North East Labour TD Tommy Broughan said the request should be rejected out of hand. “AIB is now in State ownership and has needed to have billions of taxpayers’ money pumped into it to keep it afloat. It is outrageous of the company’s senior management to now apply to have the already far too generous €500,000 salary cap lifted.
“The spurious explanation for this outrageous request is the level of salaries in private sector banks. But the appalling failure of those institutions in Ireland, the UK, the US and many,” he said.
