Allied Irish Bank (AIB) is an Irish state-owned bank. Bernard Byrne, it’s chief executive, is set to step down as the chief executive of the company next year amid industry concerns regarding a salary cap on bankers.
The news of the departure of Byrne comes only weeks after Mark Bourke, the bank’s chief financial officer, announced that he would be leaving the firm early next year.
It will potentially stir up controversy regarding the €500,000 (£443,000) salary cap of the Irish government, with Richard Pym, the group chairman, claiming that it is leading to high staff turnover.
Regarding today’s announcement, Pym stated: “It was a very grim day in my life when Bernard told me that he had an external opportunity which he wanted to pursue.”
He added: “The fact that it came so soon after the resignation of our CFO, Mark Bourke, made it doubly difficult.”
This morning, the shares in AIB declined by nine percent to €3.75 as a response to the news. However, it has since been able to recover to €3.98.
AIB was bailed out by the Irish state following the 2008 financial crash. It led to laws passed that capped salaries for senior employees at state-owned banks at €500,000.
In June 2017, AIB floated on the Irish stock exchange which made the government approximately €3.4 billion. The state still owns 71 percent of AIB.
Senior figures at the bank have raised their concerns that the cap is resulting in employees leaving for higher paid roles elsewhere.
In an interview with The Irish Times that was participated by Byrne recently, he said that the turnover of senior employees is higher than normal and accelerating as the Dublin market continued to expand to accommodate overseas companies wanting an EU base post-Brexit.
Pym called AIB “the training ground for the rest of the competition.” He said that pay caps and a ban on performance-related compensation had made it “very difficult” for Irish-owned banks.
Last April, Paschal Donohoe, the minister for finance, voted down a proposal that was presented by the AIB to lift pay restrictions to enable it to offer a deferred annual share scheme that would award its senior executives with shares up to the value of their salary.
A government review into banking remuneration is anticipated to be completed towards the end of this year.