Union wants AIB profit-share deal back on the table
Bank staff should share in profits after IPO, says FSU general secretary Larry Broderick
The Government is looking to raise as much as €3.8 billion from the IPO, and the Financial Services Union will be seeking a return to profit-sharing from the bank’s CEO Bernard Byrne. Photograph: Aidan Crawley/Bloomberg
The head of the Financial Services Union (FSU) has fired a shot across the bows of AIB chief executive Bernard Byrne, saying he will be seeking a return to a profit-share deal for employees as the bank prepares to return to the main Dublin and London stock markets in the coming months.
Speaking to the Irish Times’ Inside Business podcast, FSU secretary-general Larry Broderick said he plans to broach the subject with AIB management after the upcoming initial public offering, in which the State plans to sell up to a 28.8 per cent stake in the bank.
“Our arrangement in the past has been anything between zero and 5 per cent [of profits],” Mr Broderick said. “If staff can be brought into a model where they can help provide better service, improved performance and improved productivity all round, well, staff should share in that.”
However, he said that the union was opposed to any return to bonuses or incentives schemes for AIB management.
Inside Business Podcast
AIB routinely hit a maximum of 5 per cent profit-share payouts and pay rises in the years leading up to the peak of the property bubble, as the bank recorded a succession of record annual earnings. The State subsequently had to inject €20.8 billion as a slew of loans extended during the period went into default as the real-estate market and wider economy imploded.
The Government, which seized control of AIB in 2010, is seeking to raise as much as €3.8 billion from the IPO, currently set to be priced on June 23rd. This would add to the €6.8 billion of cash it has received from the bank since its rescue, comprising capital repayments, interest and guarantee fees.
While AIB agreed earlier this year to pay staff an average pay increase of 5.5 per cent spread over two years, Mr Broderick said the bank hasn’t signed up to a “career structure that we have for the other banks whereby there’s a clear vision for people when they join how they get to the top of the scale”.
Meanwhile, AIB warned in its IPO prospectus, published this week, that a ban on performance-related bonuses and share incentive schemes restricts it from “aligning” executives’ interests with that of shareholders and that it may also lead to senior management losses.
Performance-related pay has been prohibited across the State’s rescued banks since 2009.