I presume that this story is not true. To set a salary cap for Irish bank officials that was binding enough to deter outside candidates, and then ignore the salary cap when it came to inside candidates, would make the Government look pretty silly.
It can’t be right, can it?
89 replies on “This can’t be right”
Something that makes the Government look silly? No. It certainly couldn’t happen here.
Did they offer the higher salary to foreign candidtates or were they kept out with the low ball. I would prefer to see a competent complete outsider paid €1,000,000 per annum rather than an insider.
The Govt need to be looking ahead to the who they want in place in the event of nationalisation which remains a real possibility NAMA or no NAMA.
At this stage, I think all department officials and all Ministers need to diclose all loans where their aggregate borrowings exceed €500,000.
Silly? No. It doesn’t make them look silly. Incompetent? Pompous? Untruthful? All of those… perhaps in aggregate silly…
Brian Lenihan has stated that NAMA will pay €7bn more than they are worth for the banks’ property loans. Loans from AIB and Bank of Ireland represent 52% of the loans to be purchased by NAMA. AIB and BoI should therefore profit by around €3.5bn from this public largesse. Yet the combined market values of those two banks was just €3.3bn yesterday evening.
Implications: excluding the effects of government help, the market estimates that the two main Irish banks are worthless; the banks will be unable to raise sufficient fresh equity in the market and will end up in majority state ownership within 12 months.
Under such conditions, why would any candidate from outside Ireland accept a senior position at a major Irish bank?
I think that they might if they knew that the Govt approved of them and thought they were the right person to guide the bank through a nationalisation and refloatation.
Why would a new chief executive not be paid partly or wholly in stock or options with a medium-term vesting period? These are small banks, which have to behave entrepreneurially to recover and thrive. Offering a big upside to a strong executive would seem like the way to go. Surely being able to do this would be one of few benefits of not nationalizing the banks?
So, AIB ignore the salary cap and appoint an insider.
Will they honour their (non-binding) commitment to lend to SMEs?
*IRISH FINANCE MINISTER SAYS AIB SALARY REPORTS INACCURATE
Lenihan says he hasn’t approved the AIB salary arrangements yet.
I see that this person will not actually be chief executive of the bank. That post will be left vacant. Leaving the most pivotal post in the organization vacant during the biggest bank crisis since the Great Depression is an interesting move to say the least.
I’m no economist but I do understand the law of supply and demand: Supply a €500,000 salary and there will certainly be a demand from suitable candidates. In fact, lower the salary to €400k and there will still be plenty of demand.
The whole notion that the people who wrecked the economy of this country should be overpaid for continuing to stay in their jobs is more than “silly.” It is morally reprehensible.
The notion that they should be obscenely paid because they are so talented that they are poached by foreign firms, now that is silly.
Pls provide a source. The Dept Finance website surely does not support your claim, as the latest news there is 5 days old.
I find it all a bit strange. Surely, the largest shareholder can determine who is the CEO and how much she earns.
A few issues here:
First, if the report is true, why did nt they pull the cap and recruit someone outside from the City or the US/Australia? The salary capt was a fairly blunt and unsurprisingly not very well thought out, in terms of the overall plan of replacing the CEOs that were responsible for this fiasco.
Second, if the report is true, this is the salary of the current head of capital markets. However, what is his bonus package?
How will this be affected by the cap? It is important to remember, for capital markets bankers, salary is only the baseline, the bonus is literally where the money is at.
Finally, simply paying in ordinary stock for a outsider may be work without some modifications. This is due to the massive dilution that will take place in a few months post Nama.
With a bit of work, they could include some non dilution provisions and make the stock award as a payoff looking back over a 5 year period. Surely there is some ability to price this look back option among the myriad of advisors that the Govt. have hired.
just out on Bloomberg from Lenihan himself. “Emailed statement” in response to today’s story.
You are right though its strange that this is being billed as a negotiation between the board and the government. The government should just be telling them what to do (while not getting themsevles in micro-managing the bank).
There is a delicate balance here. I would speculate that the government is trying to avoid a situation where a senior board member would resign altogether from the board. That would be both an actual and a PR disaster.
The salary cap is the least of the issues. The governing structure at AIB is now as follows:
1. Managing Director – the insider Colm O’Doherty
2. Executive Chairman – Dan O’Connor – so technically he’s the boss even though good corporate governance says that Chairmen/CEO’s should be separate. For all we know he’s assured his pal Colm that he won’t interfere and that the new roles are simply cosmetic to keep the plebs happy.
3. Deputy Chairman (to be confirmed) – Michael Somers – his appointment is being spun as part of a concession by the AIB – ie Somers is being imposed by the government.
So when a decision is being made – who is in charge?
Does Somers get to veto? Does Dan just go along with O’Doherty?
This is a corporate governance disaster. What leverage does the AIB have over Lenihan to pull this off?
Perhaps it bears out your observation in a previous thread about the Government and the banks being passengers in the same dangerous vehicle. We wouldn’t want an independent, forceful CEO grabbing the steering wheel, would we?
Have you come to the conclusion that nationalisation is inevitable?
No, I do not believe nationalisation is inevitable. It is of course a real possibility. As per IMF recommendations, a bad bank and nationalisation are two sides of the one coin. If the bad bank solution is not sufficient then nationalisation is the next step. I think that is accepted by everyone.
Minister for Finance Statement on media reports re AIB
The Minister received a proposal from Allied Irish Bank on certain salary arrangements. The Minister has not approved these arrangements.
Any suggestion that the Minister has is inaccurate.
No further comment at this stage.
i just find the whole episode bizarre. How the AIB board thinks it has the leverage to appoint someone who the government clearly doesnt want is beyond me. There needs to be an huge amount of mutual cooperation, as the two parties can’t really seperate themselves from each other too easily, but this seems far beyond that from the AIB board in terms of them feeling its ‘their’ decision to make.
However, that said, the government rulings on executive pay (explicit) and on using outsiders (implicit) have kind of painted themselves into a corner here. If the government thought that the best man for the job of leading AIB’s recovery (and so helping the recovery of the Irish economy as a whole) was an internal candidate who needed to be paid 1mio salary, then i dont see why they shouldnt appoint him. They should have granted the AIB board at least some flexibility in terms of granting some sort of incentivised long term package for an outside candidate to lead the bank, and we probably wouldnt be in this situation right now.
What would you expect from the worst finance minister in Europe according to the FT.
Since we’re on the topic, do we know whether Michael Somers was forced out of NTMA for not being a NAMA true believer or was asked to help out with the AIB salvage operation and left willingly?
Thanks for the link.
It is just a PR disaster then. Pay negotiations in the media?
There quite a lot of uninformed comment on this topic, from a legal perspective.
This whole situation has been completely distorted by the salary cap.
The directors of the Bank are under a strict legal obligation to appoint the best candidate to the role of chief executive.
If they appoint an inferior candidate to Doherty- as a result of political pressure- quite simply they are in breach of this duty.
Given the focus on good corporate governance, I find it ironic that this point is lost on most commentators.
Your point is not dissimilar to the uproar over the banks not lending enough money at the same time as berating the banks for having loaned too much money.
It is hard to have it both ways.
No. I think he wanted out because the budget will introduce significant changes to pension arrangements. He’s out for the same reason that several senior Tax Commissioners and Garda Superintendents are retiring earlier – money. Since he was out, I guess he then became the perfect candidate.
I think this leak was a deliberate attempt by the Dept. of Finance to fight back, though for my money it’s backfiring spectacularly. It doesn’t look like “greedy bankers” so much as “lilly-livered government”.
Well, that depends on your definition of best candidate. In the view of the directors, the best candidate is an insider. In the view of the shareholder – the government – and indirectly us – we think an insider is not the best candidate because insiders are least likely to challenge the thinking that got AIB where it is today – insolvent and dependent on taxpayers for survival despite all their bluff, bluster, and frankly, downright false claims to the contrary.
The flaw in corporate governance across all the banks was an excess of cosiness. A superior external candidate would act as an antidote to this essential problem.
@ Concubar O’Caolai
i agree with you to a point. However given the realities that the banking sector now exists in, it seems odd that this is the fight they decided to pick with the government. The govt’s preference shares grant them (a) 25% of the directors of the bank and (b) 25% of voting rights for board appointments, so its also unlikely that they could ever be accused of not consulting with shareholders when making the appointment.
@ Conchubhar O’Caolai
I don’t understand your point. Are you saying that the board is legally bound to ignore any salary caps the government might impose if it results in anyone but the best qualified being hired? Genuine question – I’m not a lawyer.
If so, does that imply that the salary cap was never binding?
If so, does that imply that AIB should be going back to those other external candidates that they offered the job to (and so are presumably better than Mr. Doherty) and offering them whatever it takes?
If the board can’t find a better candidate than Doherty for the job (presumably because of the populist but idiotic salary cap) then they have no option but to appoint him.
Political considerations are not a legitimate concern of the board in making this appointment.
The directors could be personally liable for breach of fiduciary duty if they take political considerations into account.
I know that if I was a member of the board, I would resign before I would approve the appointment of an outsider whose credentials are demonstrably inferior to Doherty’s.
Sarah, I think your ‘outside thinking’ argument has sone validity but it only one factor to be considered by the board. Personally I don’t think this argument alone would justify the appointment of an ‘inferior’ candidate.
Actually for the record – I don’t care about salary caps. I think the structure of pay is more important than the amount. The problem with banking pay was not that it was high – but that it incentivised loan making on a quantity over quality basis.
(however the fact that a cap was imposed and instantly breached exposes a depressing lack of governmental control).
I’d pay more to get a furriner and break the consensus.
Ok, thanks – I was taking your reference to ‘political considerations’ to refer to the salary cap.
“If they appoint an inferior candidate to Doherty- as a result of political pressure- quite simply they are in breach of this duty.”
On the other hand one could argue that shareholder value will be destroyed by an insider appointment, however “qualified”. It is just less credible to investors.
Therefore AIBs fiduciary duty to shareholders says they must appoint an outsider. Given the scale of failure at that institution, it is hard to argue otherwise.
This is probably just a case of a government fighting on too many fronts at the one time and not being able to ensure joined-up policy thinking. The salary cap was a sop to deflect public anger at bankers being rewarded for failure. Now that NAMA has been passed the Government’s leverage over the banks is limited. It is, perhaps, a bit surprising that they have been so quick to establish who has the whip-hand now. They must be confident of their ability to raise new equity or secure funding outside of the guarantee.
So, AIB announced this without giving the Minister the courtesy of a phone call?
How to make friends and influence people !!!
As a matter of Irish company law, directors’ duties are owed primarily to the company rather than the shareholders.
I didn’t realise before now that the salary cap only applied to the CEO and chairman roles.
While the salary cap was a stupid idea in general, that just takes the biscuit.
Maybe they should just locate the ideal candidate, pass emergency legislation attaching him as a barrister to one of the ongoing tribunals, and use that to top up his compensation to a mutually agreed level.
So the Minister was contacted and is holding out. Won’t sanction the salary.
“Can’t account for why this is in the public domain”
Lenihan on the radio at the moment:
*IRELAND’S LENIHAN: GOVT NOT WILLING TO BREAK SALARY GUIDELINES
*IRELAND’S LENIHAN SAYS SOME REPORTING COMPLETELY INACCURATE
*IRELAND’S LENIHAN SAYS SALARY CAP IS `RIGHT AND PROPER’
Dan Boyle has just described the impasse between AIB and the government as an ‘Indian stand-off’. (NewsTalk)
Anyone any theories?
I believe it is also the duty of the borad to own up and cease trading if the company is obviously insolvent
This is amazing – why would someone of a bankrupt company be offered so much money? Me thinks neither bankers nor the govt ‘get it’ yet.
Surely you’re relying on a clearer definition and more evident standard of “inferior credentials” than exists? With how woolly and subjective the concept of the directors’ fiduciary duty is can you honestly envisage a situation where shareholders/the Company could sue for quantifiable damage due to such a breach?
Just for accuracy’s sake… AIB didn’t “announce” anything. The front page article in today’s Irish Times attributed the information to “sources with knowledge of the bank’s plans.”
Jack’s point re: the idea that caving into the government would be a breach of fiduciary duty by the board is the correct one. As Daniel Davies puts it (http://crookedtimber.org/2008/07/25/what-obligation-maximise-what/):
“…if you allow strategic and reputational issues to be given weight in managerial decisions, then it is very hard indeed to think of something that can’t be justified as being in the best interests of maximising shareholder value over the long term. Paying above-market wages? Efficiency wage argument, maximises shareholder value. Donating to charity? Part of the marketing budget, don’tcha know. Voluntarily refusing to sell violent video games to children? Forestalls the danger of much more punitive government regulation down the line. Etc etc.”
I don’t think substituting the company’s interest for the shareholders’ changes anything in this regard.
In any case it is surely not in this particular company’s interests to make an enemy of the government (which would appear to be quite difficult admittedly)..
@ Andy McG
Yeah. Someone leaked it. Minister had it @ 7pm last night.
Someone’s palying sillybuggers.
But why did AIB even ask the Minister to breach his own guidelines?
Indeed- the civil remedy of ‘reckless trading’.
I assume the board members of the various banks have received some pretty heavyweight legal advice on this to ensure they are in the clear.
I suppose you’re right to some extent- it does ultimately involve a subjective evaluation. All I can say is that personally, in this fraught environment, there is no way in hell I would approve a candidate who looked inferior to Doherty.
Doherty’s record at Capital Markets is impressive- most media commentators (including Shane Ross) concede this.
As a result, I find it hard to see how the Bank can attract an external candidate of comparable stature with the salary cap in place.
Of course, if you scrap the salary cap, I don’t see any reason why a suitable candidate could not be found.
@ Concubhar O’Caolai
“Doherty’s record at Capital Markets is impressive- most media commentators (including Shane Ross) concede this.”
Is someone who headed “Capital Markets” the best person to run an insolvent bank?
Not commenting on Mr Doherty as an individual, but do those in “Capital Markets” not live and breath high risk. Is this the right mindset to get on with the job of shrinking the balance sheet?
@Concubhar and Greg
Whatever about Colm Doherty’s performance at Capital Markets, someone can’t sit on the Board as one of a small number of executive directors since 2003, the time when the vast bulk of AIB’s €24bn Nama loans were made, and point to the other half of their job as having been done well?
“The directors of the Bank are under a strict legal obligation to appoint the best candidate to the role of chief executive.”
Following on from your logic the directors failed in their fiduciary duty when they appointed the previous CEO given they didn’t do a particularly good job. How can we trust them to pick the right candidate this time? Perhaps they should all do the decent thing and resign.
Because of their serial duplicity only God and the Government know what is going on.
It is all getting very X Files-ish.
This current controversy is most likely a PR distraction from the appointment of an internal candidate cooked up by Lenihan.
But who knows, maybe he is playing this one honestly, just for the novelty!
But some things are clear:
When the scale of our gigantic financial scandal became clear we would all have expected a mass clear out of AIB, and across the Irish banking system.
Instead the chief executive left after a year and we are all debating the remuneration of his internal successor.
It is obvious that the Government are completely happy with the top management of our banks, say the top 100 executives.
I think 3 of them went in Anglo and Permanent TSB so that is 97% satisfaction. In AIB, BOI & Nationwide it was 99% satisfaction. A few had to retire for optics – but their compensation packages have now passed into legend.
This government are working hand in glove with banks – they have no desire whatever to change their culture.
@E20Bn plus interest
You have to be a bit realistic – whatever about getting an external chief executive, what are the chances of 100 executives per bank coming from Canada say, to work for a presumably much lower salary cap??
An external top 1 or 2 is the most you can possibly expect – particularly when the vast majority of banking executives the world over have performed abysmally.
@ Concubhar O’Caolai
Duties are all nice in theory and law but I have seen myself in multinational companies that a big advantage in moving up the corpoate ladder is having a previous manger you have got on well with, moving rapidly above you.
The higher up in a large organisation, the less important specific skills are.
The conservatives of course will say he (or dare we say she) needs to have worked in x or y area but that is not the key to successful management.
@ Michael Hennigan,
But it’s not so much the skill set that concerns me as the mind set.
I personally don’t agree with a remuneration cap. If someone can turn around AIB or BofI and save the citizen/taxpayer a king’s ransom then give them decent pocket money for five years and a bullet tax free €10 million when the mission is accomplished.
“The conservatives of course will say he (or dare we say she) needs to have worked in x or y area but that is not the key to successful management.”
Exactly. They don’t even have to be bankers. A turnaround expert might be better.
There shouldn’t be a cap to get the right candidate. I find it useful to reference Taleb’s 10 commandments from time to time.
No3 in this instance:
“3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.”
That’s an appealing sentiment Ahura but you have to bear in mind the consequences of the US de-Baathifcation in Iraq.
While the ‘experts’ of the banking world have made a pig’s mickey of things, I dont think there are enough people with the relevant expertise and clean hands to go around.
Your not to be called the CEO anymore. We will be calling you the guy who cleans the floor, but you will be getting a higher salary than the previous CEO. The old change the job title trick will come into play here.
“I personally don’t agree with a remuneration cap.”
Me neither, but I do believe in terminating peoples salaries if they are part of a culture within the bank which has led to its demise. Current share value in both AIB and BoI is only hope value, yet these geniuses still want their cake to eat. They are not earning their salaries they are depending, like a lot of other people, to be handed them by the taxpayer.
There are thousands upon thousands of these bankers unemployed across the globe some of whom were on salaries 10 times our bankers. Intelligence is not linked to salary levels if it was this country would be a world superpower. Imagine if people here could take class actions against banks?
How many systemically important financial institutions does the state need? At the moment we have six. Five of them seem to be playing ball to some degree (at least as far as the optics are concerned). Could we make do with five?
What would be the implications of liquidating AIB? Say, in October next year…
Minister Lenihan has been publically backed into a corner by a bank with a history of profiting from tax payer bailouts.
A bank whose, managers have learned how to blackmail the state and taxpayers.
A bank, whose senior managers look to the confluence of personal wealth and shareholder value.
A bank that stockbrokers loved at one time and talked of its value and still do as Chinese walls are as thin as rice paper in Irish society.
Crony capitalism needed a bank and that bank was AIB until Anglo threatened to steal its dominance.
When it did, AIB became within two years the bank that had to be bailed out last year.
Would that be after we’ve put another €5bn in? 🙂
I’d rather prefer if it was before…
Is there any reason why Finfacts carries no mention of today’s report on global corruption by Transparency International? The report comes out annually and is normally the sort of thing that Finfacts reports very well.
Was it just a busy news day perhaps? Or was it because the report doesn’t support your often-repeated claims that Ireland is an especially corrupt country? I do hope it is the former. We don’t really need suppression of news items just because they don’t fit in with the propaganda line news organisations are taking. I’ll give you the benefit of the doubt and look forward to reading all about it on Finfacts tomorrow.
UK news orgnisations have been quicker off the mark and have reported it widely today. I provide a link below. For the record, the Transparency Internation report shows that:
(a) Ireland is the joint 14th least corrupt country (out of 180) in the world.
(b) Ireland is the joint 7th least corrupt country in the EU27.
(c) Ireland is less corrupt than Austria, the UK, Belgium, France, Spain, Portugal, Italy, the US, Israel and 156 others.
Not sure I agree either with a salary cap. I do however have a major problem with somebody who has either presided over, or played an active part in, the almost complete failure of an institution being rewarded for it by both that institution and the taxpayer.
It baffles me how anybody in the higher echelons of AIB can pull a salary with a straight face. In what other area of life would a 90% drop in the value of a business lead to a stable salary?
As Jack notes above, these people were at the helm when they drove the bank into the ground. The dogs in the street know the thing is basically bust. The idea that any of them should still be in a job is laughable. That they should be arguing with the government over whether they can get more or less than 500,000 for their continued incompetence beggars belief.
I would imagine the main bar to finding somebody for the role isn’t the money on offer, it is that the bank is doomed and everybody knows it.
I hereby offer to take the position for 350,000 per annum. I have no previous experience but then again I have also not run a major financial institution into the ground within the last 10 years. That spot on my CV alone puts me ahead of anybody on the current board I would have thought.
john the optimist:
I think you’ll find that survey is based on international ‘perceptions’
It does not prove ireland is or is not corrupt
it does not offer any evidence in that regard
I’d say a lot of people abroad never think about ireland
that – i’d say – is likely the main thing that the survey proves
If Ireland is not doing so bad on the corruption scale, it may just be a sign that the people who wrote the report simply do not know what they are talking about. I live here and judge these things by my own experiences, just take planning corruption for instance. Half the country has had problems with bad planning and planners. My experience in this area have been exceedingly bad. Yes, we might be better than Nigeria or Zimbabwe but is that any comfort to me living on an island in the Atlantic?
Take another example, as you will have seen on the other thread, we have 25,000 hotel bedrooms that need to be got rid of according to Peter Bacon. What is the governments response to this dilemma? tax people for trying to visit the country. As I write this the wind is howling and it is lashing rain! You could not make this stuff up.
Then there is the issue of incompetence and rampant inefficient bureaucracy. These are not the same thing as outright corruption. However, in many peoples minds they are pretty close to it. So “technically” we may not be corrupt. Hardly, cause for celebration?
Let’s look at some other “scores” We did not fare too well on the score of having a competent Finance Minister Brian Lenihan was ranked 19th or last in overall ratings in a report on yesterdays FT’s . He also came last in the individual economic category. He came 16th in the credibility poll. Does that make him barely credible as a minister for finance? But what about the great NAMA plan?
It is amazing how many people who stand to gain from NAMA think he is in “complete control” of his brief. It seems the rest of Europe have seen NAMA have seen the extraordinary imprudent guarantees and beg to differ.
I came across a good quote from george Orwell which might be relevant to some of the debates on this site. “all political (and economic) thinking for years past has been vitiated in the same way. People can foresee the future only when it coincides with their own wishes and the most grossly obvious facts can be ignored when they are unwelcome”. Brackets mine!
Doherty runs Capital Markets but Capital Markets also has Corporate Banking. This includes all the international lending and top Irish corporate lending operations. It also includes property lending. This is a very significant balance sheet and a major part of the overall AIB balance sheet.
I read that only Eur400 million of the AIB NAMA loans were coming from Capital Markets and that could also be performing loans. How did Doherty escape bad loans that beset the rest of AIB and in fact the rest of Irish banking? Very simple. He was ruthless about credit standards. He installed and oversaw a credit culture that proved itself with hindsight to be extremely robust.
How many outside candidates could say they had the same record? And I would suggest the AIB Board looked back and agreed that if Doherty had got the job instead of Sheehy last time out AIB wouldn’t be in this mess now.
It also makes you wonder how Boucher did get the job given that he did preside over the making of the BOI mess?
Smells like pure politics to me. After messing up in allowing a tainted candidate get the BOI job, Lenny decides to try to not give it to the best candidate because he messed up the first time.
As an aside, please remember that the state does not “own” 25% of AIB
@ Pa Bandit
“As an aside, please remember that the state does not “own” 25% of AIB”
Correct. But that doesn’t stop various of the media and politicians leaving the public with the impression that it does.
“The Minister can appoint, in total, 25% of the directors to both banks.
The Minister also gets 25% of total ordinary voting rights in respect of change of control and board appointments.”
Ireland is not particularly corrupt in the strict sense of the word. Ireland suffers more from nepotism, bad governance and poor enforcement than it does from bribery.
@eeekkk, @Robert Browne, @Richard Tol
My post was not primarily about whether Transparency International got their corruption rankings correct (although there is no reason to believe that they didn’t), but why Finfacts didn’t carry any report yesterday on the Transparency International corruption rankings, even though portraying Ireland as an especially corrupt country has been one of the main running items on Finfacts over the years. It still hasn’t.
It is quite amazing how often reports by major international organisations are ridiculed by posters here when they publish results that are not in accordance with the posters’ prejudices.
I posted the results of the UN Human Development Report here a number of weeks ago. It showed Ireland with the 5th highest Human Development Index in the world and the highest in the EU. It was immediately ridiculed by posters here as absurd, nonsensical and incredible.
Then, on Sunday last, in reponse to virulent attacks on the Chairman of the HSE, I posted the latest health service rankings produced by the Swedish organisation, Health Consumer Powerhouse, which is the leading European provider of consumer information on health care. These showed Ireland moving from 29th to 13th highest-ranked health service in Europe since the HSE took over. The Swedish organisation singled out the creation and subsequent work of the HSE as the source of the improvement. Again, the response by posters here was that the Swedish organisation didn’t know what they were talking about and that their rankings were rubbish.
Now, it appears that Transparency International have got it wrong as well.
On reflection – mature or otherwise. Always seek the simplest* way of handling a problem (Occam’s Razor, Einstein and all that!!).
1. Primary degree from a recognized TL Inst. + a post-grad level qualification in banking, finance accountancy, or what-have-you!
2. Min of 8 yr exp in commercial banking; min 3 yrs at upper management level.
4. Must NOT be a current employee, consultant or be connected in any way with the company.
5. Term of office 36 months (very good reason for this stipulation). You will get a tax-free gratuity when you leave of 1.5 times your salary.
6. State the MINIMUM salary you will accept, (no bonuses or share options).
Get the Civil Service Appointments Board to do the business.
Any problems with this ‘simple(ton)’ solution?
*Caveat: ‘Simplicity has its attractions, even if it leads to poor outcomes’
(can’t recall the source of this)
I noted the same tendency. My rule is “provide a better alternative or shut up”.
Ireland’s health system at 13th place in Europe is about right. We’re certainly not top, but not bottom either. Ireland does indeed have one of the highest HDIs in the world — HDI is per capita income + literacy + life expectancy.
We really should be aspiring to score near or at the top on all these indices, not towards the middle of a field that includes former Eastern bloc countries. We tend to be satisfied enough if we don’t get a completely embarassing score, and that’s not right.
Sure. Ireland’s health care compares badly with countries that are slightly poorer (still) than we are — and I guess we are not absolute top on the HDI because of life expectancy.
My initial instincts were correct. “This current controversy is most likely a PR distraction from the appointment of an internal candidate cooked up by Lenihan”. This encounter was more staged than the sham fight at Scarva.
Lenihan was King William and AIB were King James.
A sort intense tussle was staged. Will our hero Brian prevail against the evil banks? Yes he will! This government are working hand in glove with the banks – they have no desire whatever to change their culture. The real light sabre duel may come when Lenihan demands they lend out their ill gotten NAMA gains and they plead changed culture. But I expect they will keep to their agreement to get credit flowing.
Take a bow. Am listening to the drive time shows paint this as a win for Finance “putting their foot down”. But the salary is a sideshow. Bit of a nuisance for Doherty, but he got the job.
Lenihan is working hand in glove with the banks. But I would guess from the puzzled hurt expressed below that he didn’t tell O’Driscoll that one of the costs of an internal candidate was a PR humiliation over a bogus issue.
“Asked why the bank had initially put forward proposals that were likely to bring in conflict with the Government, Mr O’Driscoll said: “The directors of AIB are not in the business of eyeballing the Government, or as one person said yesterday, giving one finger to the taxpayer and one finger to the Government.”
We have a Minister for Finance straight out of the X Files. For us the truth is always out there – only he knows it. This is a good warning to the banks that if he doesn’t fully nationalise them and they don’t show gratitude by lending freely he will destroy them. In that situation even I would be cheering Brian on. Having appointed two internal candidates and being already completely hated I would advise them to follow all orders to the letter.
…but why Finfacts didn’t carry any report yesterday on the Transparency International corruption rankings, even though portraying Ireland as an especially corrupt country has been one of the main running items on Finfacts over the years. It still hasn’t.
The US and Italy are in my opinion, the most corrupt developed countries.
Just follow the healthcare debate in the US and one gets a good flavour of the influence of money on legislative decision making.
As for Ireland, I don’t believe it’s particularly corrupt but its Victorian culture of secrecy and very poor governance system with limited accountability, buys insiders a strong advantage – – it;’s actually cheaper in Ireland than elsewhere e.g. a ticket to a corporate box at a sporting event can work wonders!
As for the TI report, I didn’t think there was any big news in it and I’m not conceited enough to believe that people read only Finfacts!!
@ Michael Hennigan
JohnTheOptimist has no optimum, don’t rise.
Carry on regardless.
@ Michael Hennigan
Sorry, forgot to add.
He sounds like a Fianna Fail Shill.
He probably is.
Re the topic of this post and numerous other NAMA-related posts, the following from Martina Devlin in today’s Indo:
“Bickering about an extra €133,000 in a banker’s pay packet, now resolved, may seem like a storm in a teacup in a country which has just borrowed €54bn from the European Central Bank.” http://www.independent.ie/opinion/analysis/public-face-of-our-banks-reflects-turmoil-within-1947817.html
Is it not time for the, now notorious, Gang of 46 to, collectively, challenge the media to report the precise nature of NAMA: that it will finance the purchase of a portfolio of property and development loans that are worth far less than their current book value from the banks by issuing, ultimately on behalf of current and future Irish taxpayers, short-term bonds that the banks may choose to encash at the ECB or via alternative arrangements in the international bond market; and that the value of the assets securing this portfolio of loans, although originally higher than the book value of the loans, is now indeterminate and that the ability of the borrowers to generate a profile of both interest and principal repayments that will meet the coupon and redemption of the bonds issued over the proposed time-sscale is very much in doubt?
So, in a news website that has had corruption as one of its leading raison d’etre’s, you don’t think the latest Transparency International corruption rankings are news? I’m sure that, if Ireland had moved down the rankings to 24th best instead of up to 14th best, you’d have seen its news value ok. Anyway, if corrupt football referees were included in the Transparency International rankings, Sweden and France would be now taking over from Somalia and Afghanistan as the most corrupt countries in the world.
“Is it not time for the, now notorious, Gang of 46 to, collectively, challenge the media to report the precise nature of NAMA”
been there, done that. Twice in fact , once with 21 and the other time with 46. What would be the point? Insanity is defined as doing the same thing over and over and expecting a different result.
I agree that NAMA, as legally enacted, can’t be changed, but the Government’s spin machine really went action after the interventions of you and your co-signees; and the media – to a great extent – have been captured.
I still think there is a role for those who are informed and competent to inform the public (and their representatives) of the risks and uncertainties – along the lines of “this is what we’ve got and this is what it means” – and to highlight the failures of the Fourth Estate.
But perhaps not.
I believe that another letter on the final legislation would be valuable.
Needless to say it would have to be carefully drafted to make it as hard as possible for Lenihan’s rapid lie unit. It would serve as a warning shot across the government’s bows and hopefully heighten the critical public attitude towards NAMA. The more critical the atmosphere NAMA values the loans in the more conservative it will be. Another letter could well save us several billion. Maybe, just maybe, it would save us the full twenty billion of probable losses Peter Mathews predicts.
I understand two individuals (both Irish) and ex employees of Bank of America, were both offered the job of CEO of Allied Irish Bank. Clearly both refused the overtures. I understand one in particular has commenced a job as CEO with Hartford Financial, a Connecticut based Insurance Company, with a salary in excess of US$1m – How can AIB compete with that?
Colm Doherty, whilst not unblemished as he was a Board Director, during the period of “excessive lending”, he has an excellent track record regarding the Capital Markets Division (which is primarily a corporate banking operation) – negligble transfers to NAMA, robust credit culture etc etc. He is a tough operator, and well aware of the operational, strategic and cultural challenge facing him
Given that AIB can offer 750k USD in euro… shortly to become in excess of 1 mn USD?
One suspects that the lack of enthusiasm for the post is indicative of the hopelessness of the position rather than the remuneration for a bank that would rather die than dilute…
“Labour leader Eamon Gilmore told the Dáil that Mr Lenihan in an interview in the Financial Times on March 17th had said that Ireland was “planning to introduce tough legislation to clamp down on crony capitalism and excess bank lending in the wake of the property bubble. He said the measures would include a ban on cross-directorships and on chief executives becoming chairmen, as well as creating a Central Bank commission. Eight months later, there is no sign of the legislation.”
Not only that, he added: “The Government appears to have changed its mind on the measure because this week it has approved the chairman and chief executive being the function of one person in one of our largest banks.””
Insiders only appointed and no legislation. Transformed banking culture indeed.