AIB targets former executives

State-controlled Allied Irish Banks has written to former senior executives of the bank asking them to take a voluntary reduction in their pensions.

The bank was criticised at the Oireachtas finance committee for not making the request to the former executives more quickly after AIB chairman David Hodgkinson said at the bank’s annual meeting in June that it would write to them before the end of the year.

AIB chief executive David Duffy said in a statement released to The Irish Times today that the bank has “written to former senior executives of the bank requesting a voluntary reduction in pensions and this process is ongoing”.

Mr Duffy told RTÉ this evening: "We are not acting as judge and jury on the issue. We are saying that our employees are also suffering consequences of reduced pensions and other benefits as a result of the bank collapse. The public [is] suffering the consequence of having invested that amount of capital in the bank. Taking all those factors into account, anybody who was in a leadership position over the period of time which led to the failure should consider this as an appropriate gesture."

The bank declined to say which former senior executives it had written to or how many have been sent the letters.

Mr Duffy told the committee that Mr Hodgkinson committed at the annual meeting to evaluate the “ability to request a voluntary contribution back from a range of individuals in the history of the bank”.

In response to questions from Fianna Fáil finance spokesman Michael McGrath TD, Mr Duffy said that the bank had to evaluate “contractual issues and other matters which would be administrative requirements” before writing to the senior executives with the request.

Mr McGrath referred to a newspaper report at last week’s committee hearing which said that former AIB chief executive Eugene Sheehy is paid a pension of €529,000 per annum, while former managing director Colm Doherty will receive a pension of €300,000 per annum on reaching his 65th birthday.

Minister for Finance Michael Noonan said earlier this week that he does not have the legal authority to reduce the historical pay of former bankers.

AIB is 99.8 per cent State-owned following a Government bailout of €20.7 billion into the bank and its subsidiary EBS to cover expected losses estimated in stress tests of the banks last year.

Mr Duffy told the committee last week that the bank transferred loans with a face value of €1.1 billion into the bank’s pension scheme to reduce the deficit in the fund as if it didn’t the pensions of “long-retired pensioners” would have been reduced by up to 50 per cent or 60 per cent and that the bank considered that this would have been “inequitable”.