Doubts cast on bankers' pay-offs

Senior banking executives may not get retirement pay-offs even if they are contractually based, the Minister for Justice Alan Shatter has said.

Mr Shatter made a ferocious attack on the payment of €3 million to former AIB managing director Colm Doherty saying such payments were “grossly immoral”.

He told delegates at the Association of Garda Sergeants and Inspectors (AGSI) conference in Limerick that Irish taxpayers should not carry the burden to facilitate retiring bank executives leading “lives of unjustified luxury”.

He said such a payment “defies belief” at a time when banks are on a life-support machine and it demonstrated that “bad judgment, hubris and greed are still alive and well” among the Irish banking fraternity.

Mr Shatter said the Government was now examining ways to ensure that there would no repeat of such payments.

He acknowledged that bankers had legally contractual positions and an expectation that they should receive financial rewards if their employment is curtailed.

However, he said employment contracts were a “two-way process” and some bankers had run their banks so badly that it amounted to a “fundamental breach of contract”.

There ought to be a provision that bankers in receipt of State aid should not receive financial rewards when they retire, he maintained.

Mr Shatter said the Government was laying down a “marker” to other senior bank executives that it would address the subject in the future.

Mr Shatter was applauded by delegates when he said there should be no bonuses of any kind paid to bankers in the current economic climate.

Those responsible for the banking debacle should “hang their heads in shame”. Instead, the public were expected to carry “an ever increasing burden” for retired bank executives to live “lives of unjustified luxury".

“Unfortunately it seems that the unreality which dominated bankers boardrooms over the past decade continues to infect the expectations of those who long ago should have vacated their positions,” he said.

“Financial compensation sought or demanded for early retirement may not be criminal but it is grossly immoral,” he said.