No Management Bonuses, Job Cuts Planned At Anglo Irish Bank

Rachel Walsh

5 December 2008

Anglo Irish Bank, which has private banking offices in Dublin, Cork and Galway, has said it will not pay out executive bonuses this year. The country's fourth largest lender has also said there are no job cuts on the horizon for its 1,700-strong staff.

"We took a view a year ago that we would cut variable pay," chief executive David Drumm told the Irish Independent on Thursday. "We started at the top on a sliding scale that went all the way down to management level. That involved 100 per cent to 30 per cent cuts. From senior management upwards we've frozen salaries, and at the more junior level the cuts have been less severe," he added.

Staff costs fell from €235 million ($295 million) in 2007 to €206 million in 2008, largely due to the elimination of performance-based payments. That figure is expected to be similar for 2009.

Mr Drumm told the paper that he does not expect any layoffs, despite market conditions. Rather, he said, some staff may be given the option of being redeployed within the bank.

He also revealed that directors within the group will not be receiving bonuses, and that other senior staff are also seeing their performance-related payments slashed.

In 2007, Mr Drumm received a basic salary of €956,000 and an annual performance bonus of €2 million. His total remuneration, including pension benefits, was €3.27 million. The previous year, he received a basic salary of €818,000 and a bonus of €1.3 million. Total remuneration was just over €3 million.

Five executive directors, including Mr Drumm, were paid a total of €8.5 million in 2007.

On Wednesday, Anglo-Irish Bank said its full-year profits fell 34 per cent because of bad loans and investments, largely in the property market, and preparations for heavier losses to come, according to the Irish Times.

The bank is cited as saying that unprecedented losses on its loans, particularly to property developers and owners of commercial properties struggling to find tenants, drained more than half of its earning.

But it forecast it would remain profitable even if its worst-case scenario on defaulting loans becomes reality, the paper said.

The bank confirmed losses of €224 million in loans to customers, and a further €155 million loss on a wide range of failed investments, including from subprime-related products, Icelandic banks, and the collapse of Lehman Brothers and Washington Mutual in the United States to the IT.