Al­lied Ir­ish Banks to give $50m bonuses amid govt bailout

The Pak Banker - - Company& -

DUBLIN: Fi­nan­cially chal­lenged Al­lied Ir­ish Banks is sched­uled to give $50 mil­lion (EUR 40 mil­lion) bonuses to bank of­fi­cers de­spite the com­pany be­ing a pos­si­ble re­cip­i­ent of an­other bailout from the Ir­ish govern­ment.

The bonuses, amount­ing to $214,328 (EUR 161,000) for each of 2,400 bankers in the Dublin cap­i­tal mar­kets di­vi­sion, are part of a court award in 2008. The bonuses are sched­uled to be given Dec. 17.

Be­cause of the AIB sit­u­a­tion, Euro­pean bank­ing reg­u­la­tors were sched­uled to meet in London Thurs­day to come up with new rules ap­pli­ca­ble within the re­gional bloc on pay­ment of bonuses amid fi­nan­cial crises. The rules pro­pose to de­fer pay­ing the bonuses over three years and for­feit­ing the pay­ments if the banks suf­fer more losses. AIB is 19 per­cent owned by tax­pay­ers, but the govern­ment share is ex­pected to go up to 95 per­cent af­ter the Ir­ish cen­tral bank re­quired AIB to raise an­other $6.9 bil­lion (EUR 5.2 bil­lion) by the end of Fe­bru­ary. The amount will likely come not from the pri­vate sec­tor, but from the $113 bil­lion (EUR 85 bil­lion) bailout from the In­ter­na­tional Mon­e­tary Fund and the Euro­pean Union. AIB in­vestors, in­clud­ing some of the world's largest fixed-in­come pen­sion and in­surance funds, are sched­uled to meet Fri­day to dis­cuss a pos­si­ble law­suit against the Ir­ish govern­ment if the bank will be re­quired to re­duce again the value of sub­or­di­nated debts is­sued by AIB. In­vestors who held Tier 1 and Tier 2 bonds in AIB agreed in June 2009 to trade in these bonds for a new is­sue of lower Tier 2 debt. -PB News

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