Dáil Éireann Debate, Wednesday - 31 March 2021
56. Deputy Pearse Doherty asked the Minister for Finance the grounds on which he gave consent to a bank (details supplied) to acquire a company without the excessive bank remuneration charge applying to the bank being applied to the company; his views on whether he has set a precedent with respect to future acquisitions by bailed-out banks; and if he will make a statement on the matter. [17479/21]
Amharc ar fhreagraOn 2 March, AIB reached an agreement to acquire Goodbody stockbrokers for a sum of €138 million. The Minister will remember that in 2010, AIB sold the same entity, that is, Goodbody, for €24 million. Under the State agreement with the bank, AIB not only had to consult the Minister regarding the acquisition of Goodbody, but crucially it required the Minister's consent to put pay packages in place that circumvent the bankers' bonus levy, which is a levy that is passed in law by these Houses. Will the Minister clarify how he reached the decision? Why did he judge it appropriate? How does it comply with section 531AAD of the Act?
I believe this is a positive outcome for the Irish economy. It is important to have a competitive and vibrant stockbroking sector in our country to help to ensure Irish companies and employers can access the funding they need to finance their future growth plans and employ more people in Ireland, particularly as we exit from Covid-19.
It is also a particularly welcome use for Fexco, which as the Deputy knows is a really important employer in the south west of our country. The proceeds it receives from this transaction will help it to continue to grow and innovate in financial services and maintain employment in the region.
This also offers a really good opportunity for AIB to deliver on its need to diversify its revenue in a low interest rate environment. The addition of Goodbody offers opportunities to the bank to be able to broaden the financial offerings it has in the life, pension, wealth and asset management sectors in addition to enabling Irish companies to access a wider range of services.
As the Deputy can appreciate, the standard remuneration arrangements in stockbroking businesses are very different from those that pertain in a retail and commercial bank such as AIB. Reflecting this, the bank sought my consent for the continuation of the current remuneration arrangements in Goodbody. I agreed to this but it is being done in a manner which ring-fences Goodbody from the rest of the AIB group and ensures ongoing compliance with the Government policy on bank remuneration. It is important to stress, therefore, that there have been no changes to the Government's policy on remuneration. Post deal, provisions at Goodbody stockbrokers will be completely ring-fenced from the rest of the AIB group, preventing any question of a breach of the Government's current salary cap and the pay restrictions that apply to the bank.
Three issues are at play regarding this, that is, how this position interacts with the law, whether it is politically appropriate, and the precedent it sets for other banks. On the first point, I have read the legislation, which specifies that excessive bank remuneration charges will apply to employees of any institutions that were given financial support under either the Credit Institutions (Financial Support) Act 2008 or the National Pensions Reserve Fund Act 2000.
AIB was one of those bailed out by the Irish taxpayer the tune of €20.8 billion. There is, therefore, no question the bankers' levy applies in law to AIB. The question now is how AIB has dodged the levy by acquiring Goodbody stockbrokers and how the Minister's consent to this arrangement - this financial engineering - was possible given the requirements of the law and the fact it is now fully owned 100% by AIB.
The second issue is whether it is appropriate at all given the actions of the banks and the stockbrokers in recent times, from the tracker mortgage scandal to Davy, as well as the fact the taxpayer still has to recoup the €10 billion pumped into AIB to save it. There is no doubt that this is about eroding the bankers' levy. How can this decision to undercut be deemed appropriate by the Minister who gave his consent to this process when so much remains to be resolved?
This is about the future of three Irish companies, namely, AIB, Fexco and Goodbody. This is a transaction that is good for a large employer and financial service provider in our country. For Fexco, the original owners of Goodbody, this is a transaction that is important and beneficial for its future. The future of Irish companies matters to me.
The Deputy referred to the fact that we still need to regain the money put into AIB at the time of the last crisis which our country had to endure. Parts of how that bank has the opportunity to become more valuable in the future is through the provision of the kind of services that Goodbody will be able to deliver when owned by the AIB Group. Of course I got the advice of the Attorney General on the legality of what I was doing. That advice indicated to me that what I was doing was of course legal. I made this decision because it is good for three Irish companies and for those who work for them.
That is not what this is about. This is about allowing for bonuses to be paid to an Irish-owned institution that was bailed out. AIB will own this entity 100% but AIB was bailed out with nearly €21 billion.
Will the Minister enlighten the Dáil as to what is the average bonus paid to a senior wealth manager in Goodbody? Would he be surprised, for example, if I told him it was €400,000 to €500,000? Is that what the Minister has signed off on or is it something less? Will he tell us what he has signed off on because the law states that bonuses cannot be paid to entities bailed out by the Irish taxpayer, particularly an entity that still owes €10 billion to the Irish taxpayer from that bailout? What are the bonuses that the Minister has allowed in Goodbody? If he has nothing to hide and thinks everything is great and upfront, will he tell the people what are the average bonuses for the most senior people in Goodbody?
Bonuses paid to Goodbody were paid by a company that the State at that point did not own. What I am doing here is allowing remuneration in Goodbody to continue as it was in the past. I am allowing AIB to continue to be subject to the policy in place relating to bankers' pay. It is really clear what is happening.
I do not have available to me now the information regarding the level of Goodbody bonuses for last year. I did not bring that into the Chamber. At that point the Government was not involved in, or AIB did not own, that company. Why all this is being done is because it is good for three Irish companies.
I want to ask Deputy Doherty a question. Is he against this transaction happening? All that matters to Deputy Doherty is that he can get Facebook content so he can ring up his pals either in Berlin or Belgrade to get them to send out material about what we are doing here. What I am doing is making decisions that are right for Irish companies. I am trying to put in place a positive future for, in particular, indigenous Irish companies. I have answered the question. I know Deputy Doherty will be speed-dialling his buddies in Berlin to generate whatever material he wants. This is about Irish firms. Are you in favour of a transaction happening that is good for Irish companies?
The Minister should speak through the Chair.
The Deputy is eating into other Members' time. I ask both the Minister and the Deputy for their co-operation.
