Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank Deputy Ross for tabling this Topical Issue and for the opportunity it provides me to respond on behalf of the Minister for Finance. Let me be clear - the Minister has not bottled anything. He has put in place a clear process in respect of standard variable rates. He has made his own views clear on the records of the House and in many other places, as have the Taoiseach and I during debates in the House. The Central Bank's report on standard variable rates is with the Department of Finance and will be considered by the Minister, who will meet the main banks next week to discuss the issue. A process is in place and I ask that the Deputy not pre-empt the outcome.

The resolutions across AIB and Bank of Ireland covered a number of broad areas: the consideration of the report of the directors, the auditors' report and the accounts for 2014; director-related resolutions, including reports on the directors' remuneration and their re-election; authorisation for the directors to fix the remuneration of the auditors; and technical resolutions allowing the directors certain authorisations relating to the issuance of shares.

Before recommending how the Minister should vote, officials in the Department analysed each of these resolutions. The Deputy made it sound as if the Minister or his proxy just turned up and decided out of the blue. As part of the analysis, officials took into account the fact that ISS proxy advisory services, an expert independent firm that advises institutional shareholders on how to cast their votes at general meetings, recommended that shareholders vote in favour of the Bank of Ireland resolutions. The conclusion of this analysis indicated no reason to vote against the resolutions that dealt with the report of the directors, the auditors' report, the accounts, the remuneration of the auditors or authorisations relating to the issuance of shares.

Regarding the resolutions on directors' remuneration and the re-election of directors, in the normal course investors would vote in favour of such resolutions unless they were dissatisfied with the performance of such directors. It is important that we update our language as regards the banking situation because AIB and Bank of Ireland recorded strong financial results for 2014. Highlights of these results included a significant return to profitability since the onset of the crisis, impressive capital build, significant growth in new lending and good progress in reducing non-performing loans across all portfolios.

The State remains the largest shareholder in Bank of Ireland, with a current minority shareholding of 14%. It is worth noting that, including the State, investors voted overwhelmingly in favour of all Bank of Ireland resolutions within a range of 93.11% to 99.96%. Resolution No. 2, which was to consider the report on directors' remuneration, was passed with 99.73% of votes.

Shareholders in both banks were asked to vote on resolutions covering the receipt or consideration of the directors' remuneration reports. The report is contained in the annual report and accounts of each institution. The acceptance or rejection of these resolutions has no impact on the actual remuneration received by each of the directors.

At the 2014 AIB AGM, shareholders were asked to vote on changes in the structure of non-executive directors' remuneration. These changes moved the remuneration from a fee-per-meeting basis to a fixed annual fee for board membership and an additional fixed fee for membership of each board committee. These changes reduced the amount paid to AIB Group directors by €39,000 versus 2013.

In Bank of Ireland, total directors' remuneration in 2014 was €2.76 million, down marginally on the 2013 total of €2.77 million. Within this total, it is worth noting the following: total remuneration costs, including pension contributions where applicable, for the two executive directors and the governor and deputy governor remained unchanged year on year. Since May 2009, the group CEO has waived a portion of his salary to the sum of €67,000. In addition, in 2014 he waived €51,000 of his pension accrual for the year, resulting in the pension cost to the bank being the same as the cost in 2013. Against this backdrop, to vote against the proposed resolution on directors' remuneration would have been a significant and serious matter and could be perceived as interfering in a commercial entity that could do damage to Ireland and - the Deputy referred to shareholders, the taxpayers - the value of our bank investments. Accordingly, the Minister decided that it was appropriate to vote in favour of these resolutions.

See this speech in context