AIB shenanigans

The row about pay levels for bank executives has raised its head in the last few days with AIB's appointment of a managing director. As part of the re-capitalization earlier on in the year, Brian Lenihan capped the pay for top bankers at €500,000. However it appears that AIB was unable to attract anyone from outside the organisation to run the place for such a paltry sum of money.

Therefore, AIB decided that they would have to appoint from within and came up with Colm Doherty as the man to do it. The problem was that Mr Doherty was already earning in excess of the €500,000 cap. After various back and forths it was announced this morning that he will take the job at the reduced rate. Of course it is unclear as to whether bonuses, options and other perks will be extended to Mr Doherty to bring his total package back up.

Of course the real problem with the whole exercise is that we now have AIB being run by an insider - one of the very people who ran the bank into the ground over the last few years and forced the government to step in and prop it up. Is it really that difficult to attract someone half competent to run the company for less than a half million? Half competent would be infinitely better than the current group at the top table since they have shown themselves to be completely incompetent.

To my mind the thing that stinks here the most is the timing. With NAMA jst around the corner, AIB released an interim statement today which has been completely ignored as people focus on the pay dispute. In the section called Asset Quality there is an interesting table showing the breakdown of the €24B of property loans that will be transferred to NAMA. It reckons that €10.5B of those will be impaired by the end of the year. That is almost 44% of their NAMAbound loans in trouble which is hard to reconcile with Lenihan's continued insistance that NAMA will end up making a profit for the Irish taxpayer.