Mr. Gerry Quinn:

The general position is that we faced some very significant issues regarding staffing in two areas of the bank on what were highly critical projects of national and international importance where failure was not an option. We faced a situation where we could have lost a significant number of people who were vital to ensuring we fulfilled our mandate in this regard. We analysed the options open to us. These were particular individuals with particular skills who had accumulated knowledge in these areas. We considered the options that were available and discussed them with the banks' budget and remuneration committee. We assessed that the best option available to us at the time was putting retention payments in place such that we would aspire to keep those individuals to cover that particular period of exposure.

We took legal advice in respect of FEMPI because we are covered by the FEMPI legislation, as the Chairman noted. Our staff have taken all the cuts associated with FEMPI and the pension levy, even though we are independent. The legal advice suggested to us that in these particular circumstances - a very limited fashion with a very limited number of people - it was possible to pay those retention payments and be FEMPI compliant. That is the basis on which we operated. I accept that it is challenging for people to understand and reflect on but I assure the committee that this was not taken without a lot of consideration and a full understanding of the impact of failure on the particular projects with which we were dealing. We have a policy relating to that, which is called the interim retention policy. It is available on our website so it is publicly available. Nobody else has been admitted to that policy since the cases to which the committee has access on the basis that the circumstances that would give rise to that situation have not arisen and might not be likely to arise again.