Michael Noonan (Limerick City, Fine Gael)

I have the utmost sympathy for EBS staff regarding the timing of the announcement of the decision that this so-called 13th month payment would not be made. This does not reflect well on management and should not have happened. However, this payment is described in the contracts of the relevant staff members as the payment of a Christmas bonus. The terms of the latest capital investment in AIB and its accompanying letters made clear in July 2011 that no bonuses whatsoever could be paid or awarded.

Since 1 July 2011, EBS is a wholly owned subsidiary of AIB and covered by the above conditions. When approached in November and again in December, my Department made it clear to AIB management this was our understanding of the relevant provisions of the agreement underpinning the State's capital investment in the bank.

Much has been made of the fact that these payments have been paid for several years previously, including especially from 2008 onwards. For clarification, when the State invested moneys in EBS in May 2010 by means of a subscription for a special investment share, remuneration restrictions only applied to senior management. As a result of this investment and the recommendations of the covered institutions remuneration oversight committee, no bonuses have been paid to this cadre of staff since 2008.

As conditions deteriorated and further capital was injected into AIB in December 2010, these restrictions were broadened to formally prohibit the payment of bonuses to all staff and became the template that would apply to all the institutions as further investment was made. Had EBS been maintained as a separate institution following the PCAR, prudential capital assessment review, of March 2011 any further injection of capital would have been covered by the expanded restrictions.

The Government decided, as part of the restructuring of the banking sector, that EBS would merge into AIB and, as a result, the wider restrictions on the payment of bonuses came into effect. Either way the blanket restrictions on the payment of bonuses to all staff would have applied. I have indicated this when replying to parliamentary questions on the matter yesterday and today.

While I have sympathy with the staff on the timing issue, it has to be stressed that the State's capital investment into the banking has protected jobs across the financial sector. Without this crucial investment, our banks would have encountered severe difficulties and many jobs would have been lost. The State has already invested some €20 billion in AIB and identified it as one of the two universal pillar banks.

Last week saw the introduction of a very difficult budget that meant reductions in State payments to some of those who rely on the State as their only source of income. This was in addition to other reductions in previous budgets including the termination of the Christmas bonus payment to social welfare recipients. We are facing three more difficult budgets as we attempt to extricate ourselves from our present challenging economic and fiscal circumstances. While I readily acknowledge the sacrifices made by employees, both public and private, in this battle for survival of the nation, in this context, it is not unjustified for a bank, which the State has rescued, not to pay a Christmas bonus.

The proposed strike is to be very much regretted. I fully acknowledge the staff have a right to express their grievance in any legitimate way they feel. However, the union and staff should reflect again taking all of the circumstances into consideration. I understand EBS is putting in place a loan scheme to facilitate employees to assist them in meeting their commitments over this period.

This is not a case of going after the "little people" who have not caused this crisis while more senior employees have departed with generous remuneration and severance arrangements, as has been alleged. This latter aspect is a cause of great annoyance to citizens and shared by the Government. In such circumstances we are greatly constrained by the strong legal advice available that recovery of such awards would not be possible. Hence the introduction of the blanket restrictions on the payment of bonuses and other remuneration items now included in the latest agreements with the banks.

In such circumstances, I do not think it is unreasonable to ask employees of a rescued institution to forgo a Christmas bonus where it is totally dependent on the State for survival while the Government has to ask citizens to accept much greater impositions with the likelihood of more to follow.

See this speech in context