Friday, June 15 08:18:17
AIB is to close its defined benefit pension scheme for staff, the bank said yesterday, as it announced a series of changes to employee terms and conditions as part of an effort to save more than E30 million annually. Although the bank's defined benefit scheme has been closed to new entrants since 1997, about 6,500 employees will be affected by the change, which will see staff automatically switch to defined contribution schemes.
AIB staff are also to lose preferential rates on loans and on deposits from September 1st, as well as allowances for club subscriptions. While "club subs", which allows staff members to claim membership fees for gyms and other societies, were abolished for new entrants late last year, they will now be eliminated for all staff members. Company cars are also to be scrapped next year, although staff will receive a non-pensionable cash payment in lieu. The news that more than 600 of the bank's top managers are to take reductions in their total packages of 7.5-15 per cent did little to soften the stance of unions yesterday, who vowed to resist the pension changes.
Members of AIB's senior executive committee, which includes chief executive David Duffy, are to take a drop of up to 15 per cent in total compensation, while senior executives and senior mangers will take pay cuts of up to 10 per cent and 7.5 per cent respectively. The bank is proposing to extend the current pay freeze, which has been in place since 2008, to 2014.
AIB is 98.9 per cent owned by the State which has injected E20.7 billion into the bank and its subsidiary, EBS. The latest cost-saving proposals do not apply to EBS staff. AIB is seeking 2,500 redundancies from its 14,000-plus staff. A large proportion of these redundancies are expected to be secured through early retirement. The Irish Times
State-owned utility Bord Gais will shortly begin seeking a corporate adviser to work on the sale of its energy business, which is likely to go ahead next year. The group yesterday reported that sales grew 5 per cent to E1.6 billion but profits slipped 15 per cent to E94 million as a result of increased finance and depreciation charges. Earlier this year the Government earmarked for sale one of the group's key divisions, Bord Gais Energy, along with a number of other State assets.
Group finance director Michael G O'Sullivan confirmed yesterday that Bord Gais will take the first step in recruiting a corporate adviser to work on the sale in the coming weeks. This will involve advertising for bids from interested parties in the official EU Journal. It is likely to be three to four months before a successful candidate is hired. Merchant or investment banks or stockbrokers normally act as advisers in corporate sales. New Era, the agency established to oversee the sale of State assets, will appoint a firm of its own, but Mr O'Sullivan stressed yesterday that whichever organisation Bord Gais hires will be the lead adviser.
He explained that factors such as directors' legal obligations and the company's own knowledge of the market led to a decision that the board would be directly involved in the sale. Once advisers are hired, it could take between nine and 12 months before a sale goes ahead, which means that a deal is likely to be done at some stage late next year. Bord Gais Energy supplies gas and electricity to consumers and businesses and operates a number of electricity generating plants.
The group's other main division, Bord Gais Networks, will remain in State ownership as it is considered a strategically important part of its energy infrastructure. It is responsible for the Republic's natural gas transmission network, operates two interconnectors between Scotland and Ireland through which most of the natural gas used here is transported, and owns infrastructure in Northern Ireland and on the Isle of Man.
The Government recently charged the group with establishing Irish Water, the Republic's new water utility, which will see it taking over from the local authorities, which are responsible for water services. Bord Gais yesterday said it paid a E33 million dividend to the exchequer. The group's profits before tax slipped 15 per cent to E94 million last year from E123 million in 2010. The Irish Times
Bank of Ireland yesterday opposed efforts by property investors Brian O'Donnell and his wife, Mary Patricia, to file for bankruptcy in London, insisting it would question claims that they are resident there. The O'Donnells have filed a debtors' petition for bankruptcy, with their solicitor, Simeon Gilchrist, telling registrar Peter Nicholls that the application is "urgent" and that they are "seeking the protection of the court from creditors". During the peak of the property boom, the couple had established property syndicates that invested up to E2 billion in some top-flight properties around the world, including the headquarters of the British department of education in Westminster.
They are the latest among a series of Irish property investors, or developers to seek to declare bankruptcy in London, including Priory Hall developer Tom McFeely, whose application will be opposed today in London by one of his creditors, Theresa McGuinness. The crux of the argument to be heard on a date after mid-July between the O'Donnells and Bank of Ireland is the O'Donnells' claim that their "centre of main interest" now lies at their Barton Street home in London - a property that is already in the hands of receivers. The bank has already lodged a creditor's petition before the Irish courts seeking the O'Donnells' bankruptcy, but counsel for the bank Hanna Thornley said that the bank has made it clear that it will halt such proceedings until jurisdiction is decided by the High Court in London.
Mr Gilchrist said the petition should be dealt with as quickly as possible, saying there is a danger otherwise that the petition "will disappear into the long grass for an unconscionably long time", he told the High Court registrar. The O'Donnells, he said, are "left exposed" to debtors in Ireland unless the London petition is marked as urgent, leaving open the danger that "we will have dissipated the estate and incurred costs" when the O'Donnells' affairs are finally resolved. The Irish Times
Finance Minister Michael Noonan said yesterday that he plans to "commence conversations" with European colleagues next week in Luxembourg on restructuring promissory notes used to bail out the former Anglo Irish Bank. The Government has made a deal on the promissory notes a cornerstone of the country's economic policy. Repayments cost the State around E3.1bn a year and many economists say it will be impossible for the Government to meet its targets without some sort of arrangement to reduce the annual repayments.
Mr Noonan said he presumed "all hands are on deck dealing with Spain and Greece" but added that the Government will table a so-called technical paper on promissory notes as a policy paper once it is completed. Experts from the commission, the ECB and the IMF have been meeting in Brussels at Mr Noonan's request to discuss possible solutions to the problem. Any changes on the promissory notes will require agreement from all 27 EU member states, Mr Noonan told a hearing of the Oireachtas sub-committee on finance to discuss the ESM Bill.
At the committee, the minister said there is "significant support" among some European nations to fund the banks directly from the ESM so they won't appear on sovereign balance sheets but conceded "there wouldn't be lot of support for that among the triple-A rated countries". "Of course Europe is a democracy of democracies but the people who pay the piper have a stronger say on matters like this." Mr Noonan's comments came hours after the IMF approved a E1.4bn disbursement to Ireland but warned that the eurozone debt crisis could dampen Ireland's export-led recovery.
"Ireland's policy implementation has continued to be steadfast and ownership of the programme remains strong despite the considerable challenges the country is facing," the IMF said. "However, as financial tensions in the euro area have resurfaced, Irish sovereign bond sp