CANTILLON: INSIDE THE WORLD OF BUSINESS:STAFF AT Anglo Irish Bank are expected to get details next week of the job cuts and associated redundancy package currently being negotiated between the bank's management and the Department of Finance.
Rumour has it that chief executive Mike Aynsley will break the news via a podcast to all staff. It’s all very high tech but will not disguise the fact that the bank is expected to shed anywhere between 200 and 500 jobs in a package targeted at staff with short service.
The terms are said to be something in the region of five weeks salary per year in respect of the first two years and then two weeks salary for every year after that.
Presumably it will appeal to younger staff who might be thinking of emigrating or changing career.
It will be interesting to see if it proves tempting for any of the senior management, whose close associations with the previous regime, are causing some discomfort to both the bank itself and also its new owner, the Minister for Finance.
Redundancy payments – generous as they might be – are unlikely, however, to make much of a dent in the debts owed to the bank by some of its top management cadre.
Pat Whelan, the head of the bank’s Irish business, had a loan of about €5 million when it was taken over by the State, while his salary was €650,000.
The executive in charge of Anglo’s UK business, Declan Quilligan, had a loan of about €3.3 million, compared to a salary of €770,000. Anglo’s director of group finance, Matt Moran, had loans of about €2 million while the head of Anglo’s US business, Tony Campbell, had a loan in the region of €5 million. Their salaries are not known.
The bank’s best chance of ensuring this money is repaid may yet be to keep on paying their salaries.
Decision time
THE STALEMATE over the appointment of a successor to Eugene Sheehy as chief executive of Allied Irish Banks continues.
While the board of the bank has not yet put a formal recommendation to Minister for Finance Brian Lenihan on its favoured candidate, AIB directors have made it clear that they feel – after casting their net inside and outside the bank – that Colm Doherty, head of the bank’s capital markets division, is the right man for the job.
There is no doubting Doherty’s strengths and capabilities but the Government prefers an outsider to replace Sheehy, particularly following the public and political furore over the appointment of Richie Boucher, an internal candidate, as chief executive of Bank of Ireland earlier this year.
The AIB board recently floated one idea with Government that involved the appointment of Doherty as chief executive and a promise to fill a number of key senior roles around him with outside candidates. The Department of Finance refused to bite and the bank has been sent looking externally again.
Another solution suggested internally within the higher ranks of the bank was the appointment of the bank’s chairman Dan O’Connor as executive chairman with Doherty taking up the lower-ranking but still significant position of chief operating officer. This specific option was not put to Government as it is believed to have died a death as neither O’Connor or Doherty were interested in such a compromise.
With no solution in sight, threatened resignations by certain directors may eventually lead to actual boardroom departures. The bank appears to be in limbo with some big set pieces ahead as it prepares a crucial restructuring plan on its future for Government and the European Commission next month, and tackles the prickly transfer of €24 billion in loans to Nama.
Mutual love
AMIDST ALL the political noise on the Nama debate, Minister for Finance Brian Lenihan showed more of his hand on a type of institution he would like to see emerge in a reformed banking industry, as he endorsed the idea of a larger mutual society to compete with the main two banks, AIB and Bank of Ireland.
“As far as the domestic institutions are concerned, if we are to have the two main institutions on the consumer lending side, it is desirable in principle that a mutual society should exist to compete with them in the provision of home loans, car loans and so on. That is something with which all sides of the House would agree, Lenihan told the Dáil late in the debate.
The statement must have pleased Fergus Murphy, chief executive of the EBS building society, which is essentially the only mutual left in the country given that Irish Nationwide had abandoned its founding principles during the boom in favour of becoming a boutique lender to developers and builders.
Murphys society is likely to be merged with Irish Nationwide and possibly Permanent TSB once that bank is offloaded by Irish Life Permanent from its life business.
Given Lenihan’s statement, it’s likely that EBS will form a central plank in any new expanded mutual constructed out of the mess in the banking sector.
NEXT WEEK
Much attention will be focused on the fortunes of two Irish-listed companies reporting results next week. Budget airline Ryanair will release its first half results to the market on Monday while Bank of Ireland is due to publish its interim results on Tuesday before the market opens. Independent News Media will hold an EGM on Wednesday to seek shareholder approval of its refinancing plan which will see bondholders take an equity stake in the listed media group.
For regular commentary on business and economic issues visit our blog, Current Account, at www.irishtimes.com/blogs/business
Twitter users can receive links to the latest business news and blog posts by following us at twitter.com/IrishTimesBiz
