Anglo board yet to decide on frozen bonuses

THE BOARD of State-owned Anglo Irish Bank has not yet decided whether to pay frozen bonuses owing under a long-term incentive plan to staff who sign up for the redundancy plan unveiled by the bank on Wednesday.

Many Anglo employees are still owed part of their bonuses from the recent boom years under the terms of the bank’s long-term incentive plan (LTIP), with large sums remaining unpaid following the Government’s decision to stop the payment of bonuses.

Under LTIP, staff would receive bonus payments over a period of time, typically three years, and many employees have not been paid part of their bonuses for the boom years of 2006 and 2007.

A spokesman for the bank declined to comment on the status of frozen bonuses for staff who take up the redundancy offer.

The bank is seeking to cut about 460 jobs over the next two years, including up to 230 redundancies initially, as it shrinks its business.

Anglo will cut 230 jobs in Ireland, the UK, the US and Europe by February, while a second phase of cuts will follow next year through to 2011, with “similar reductions” likely to be made.

The redundancies are open to staff at all levels of the bank, including senior managers who would also be owed significant payments under Anglo’s LTIP.

The Government committee established under the bank guarantee scheme recommended that no bonuses be paid to senior executive staff and directors for the duration of the two-year guarantee.

Bonuses, for the most part, have not been paid for 2008 across the guaranteed institutions, with the €1 million payment to former Irish Nationwide Building Society chief executive Michael Fingleton being the most notable exception.

Anglo replaced its cash-based LTIP in 2008 with a new scheme where shares in the bank were issued instead. Shares owing for bonuses are effectively worthless since the nationalisation of the bank. Staff now expect to receive cash instead for frozen bonuses.

Staff received shares under LTIP as part-bonus last Christmas before nationalisation. Employees are concerned that they may not receive their deferred bonuses from earlier years and are unsure whether they will receive payment if they sign up for redundancy.

Staff numbers will fall by 470 in the first wave of job cuts and following normal employee departures, the closure of the bank’s Austrian business and the transfer of 110 staff to the National Asset Management Agency (Nama).

The bank employs about 1,530 staff, down from almost 1,800 last year. This will drop to 1,300 following the first round of job cuts.

“This bank will undergo radical change in the coming months and today’s announcement is the first phase of a programme intended to reduce costs,” chief executive Mike Aynsley said.