IBRC liquidation is good for the State but was it fair to employees?

On Monday representatives from the Irish Bank Officials Association (IBOA) met with the special liquidators of Irish Bank Resolution Corporation to press their case for staff at the failed bank who were told on February 7th that they would be made redundant with only statutory entitlements.

A lot of work remains to be done before the wind-down of IBRC’s loan book is completed, and the IBOA is campaigning to retain some roles while also securing improved exit terms (they want staff to get four weeks per year of service) for those now facing compulsory redundancy.

They are in a weak position given the powerful legislation enacted to see through IBRC’s liquidation and the fact that the Government can’t be seen to give preferential treatment to one set of creditors over another.

Given IBRC's toxic history – it combined the former Anglo Irish Bank and Irish Nationwide – few tears were shed for the staff who are set to be laid off as a result of the dramatic liquidation of the bank last month. This was understandable given that IBRC will have cost the taxpayer something north of ¤25 billion when all the calculations are complete on its wind up. There was also little sympathy for the highly-paid cadre of senior executives parachuted in to run the bank post-nationalisation, including former chief executive Mike Aynsley who received ¤866,000 in 2011.

There might also be little sympathy for other staff members, especially following the revelation yesterday that the 563 “continuing employees” (staff who were working for the predecessor banks in 2008) earned average total remuneration of ¤92,200 in 2012.

This included an average salary of ¤71,300, which is 16 per cent higher than what they were earning in 2008, the year it all began to unravel for Anglo and Irish Nationwide. Compare IBRC's total remuneration to the average at AIB of ¤60,400 or Bank of Ireland at ¤61,900.

According to Mercer's report, half of the staff who remain from 2008 have not received an increase in remuneration since at least January 2009, when Anglo Irish Bank was nationalised.

Redundant
Why should we care about the staff who are set to be made redundant?

A few days ago I received an email from someone who has worked at IBRC/Anglo since 1997. “I loved my job and I loved the bank,” it said.

This all changed in 2008 when the various scandals began to emerge and we realised that Sean Fitzpatrick, David Drumm and Willie McAteer had feet of clay.

The person who wrote to me, and who asked that their name not be used, initially defended “Seanie” and “Drummer” on the basis that there was surely a reasonable explanation. “I don’t expect any sympathy for the financial loss I suffered as a result. I have sought forgiveness from my family and friends who I recommended the shares to, and mostly I think they accept that I didn’t know, but mostly we’re trying not to talk about it.”

Since then this person made a “conscious decision” to do what they could to repair the damage and return value to the taxpayer. “I did not expect to be rewarded for doing this . .. but I did not expect to be punished for it.”

The redundancy package agreed previously with the department of finance (six weeks per year of service) was “compensation for losing my job, compensation for possibly not having a job for many months to come, and is money I need to pay my mortgage and feed my family”.

Now they will get nothing.

This person makes the point that the existing staff at IBRC are critical to the task of sorting out the ¤16 billion loan book which will be either sold to investors or transferred in August to Nama. Somebody has got to do it, and who better than those who understand the details of the loans?

“It hurts me greatly to know that those who were most responsible for the disaster within Anglo/Irish Nationwide were able to manipulate the system right to the end to ensure they received huge payoffs to walk away. Those who gave up and deserted us like the proverbial rats were also rewarded. This is not justice.

“There is nothing morally or commercially right about the treatment of the remaining staff at IBRC.”

It will be interesting to see if the IBOA chooses to test the constitutionality of the Government’s decision in the courts.