Lenihan resolute on bank pay limit

The Government will not back down from imposing a cap on bankers' salaries at financial instructions covered by the guarantee scheme, Minister for Finance Brian Lenihan insisted today.

He was reacting to reports today that Colm Doherty, a senior executive with AIB, has been proposed as the managing director of the bank on his existing salary, thought to be over €630,000, which is in excess of the Government cap of €545,000 for the four largest banks.

Mr Lenihan said the communication from AIB had only been received at 7pm yesterday evening, and was discussed by the Cabinet this morning.

"The Government is not willing to break with the established guideline in this case," he told RTÉ Radio's News at Onethis afternoon.

"The entire morning's coverage of this proceeded on the assumption that the Government in some sense had sanctioned this salary.”

“We never did; indeed I believe that the newspapers had the story before even the Government received the communication from Allied Irish Bank at 7 o'clock yesterday evening."

Mr Lenihan said the focus was on establishing an effective management structure for AIB.

"The question of effective management at Allied Irish Bank is a very important question for the country," he said.

“Matters are kept under review in relation to the banks but remember it wasn’t envisaged that chief executive position be filled at this stage. That’s one of the points that hasn’t been clear in the coverage either. What we’re seeking to do is put an effective management structure in place for this bank,” he said.

Mr Lenihan dismissed criticism from Opposition speakers that there had been no change in the banks, and calls for appointment of various figures.

He also said the Government has determined to adhere to the pay cap.

"The view of the Government and myself is that we cannot sanction an appointment in breach of the guideline at this stage," he said.  "I’ve made it clear to the bank, and the Government is clear on this, that the guidelines will not be broken in this case."