Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

Approximately two weeks ago, I attended in succession the AIB and Bank of Ireland AGMs, as a shareholder in one case, I should declare, and as a proxy in the other. They followed a similar pattern. On the platform was a group of overpaid executives. Off the platform in the audience was a crowd of battered shareholders who had had a difficult time in recent years. In the background was a history of exorbitant standard variable rate mortgages. Both banks have executed a punitive regime on their customers in terms of standard variable rate mortgages.

At the time, the banks also had a fourth important characteristic in common, that being, the largest shareholder in AIB, the Minister for Finance. On behalf of the State, he held 99.8% in AIB and 14% in Bank of Ireland.

This was a heaven sent opportunity for the Minister, particularly given the AGMs' timing, to extract extraordinary leverage on those directors and banks to do something about reducing standard variable rate mortgages. He bottled it. At the end of both AGMs, we found out that the Minister had unfortunately cast in favour of all board resolutions. In the case of AIB, these included an increase in the remuneration of the chair by 33% on last year, from €275,000 to €365,000. When standard variable rate mortgage holders are suffering so much, this seems inappropriate. It seems even more inappropriate that the Minister should be casting those votes in the board's favour at a time when the shareholders were suffering so much. An almost bankrupt State voted for an almost bankrupt bank.

I cannot understand why the Minister did not instead tell the board that not only would he not vote for members' remuneration, but that he would not vote for them to be re-elected. He cast his and our votes in favour of re-electing every director at a time when they were approving this policy, eyeballing him and telling him that, no, they would go ahead and do what they liked. The Minister had a great chance. Unfortunately, he did not take advantage of it.

Why did he not do this? What motivated him to vote for these incredible salaries? I believe that I am right in saying that every non-executive at AIB received at least €80,000 in 2014. How that remuneration was earned differed. Sometimes, it was by way of salary because people sat on board committees. At the end of the day, though, they were all getting more than €80,000 per year, the chairman is now getting €365,000 per year, standard variable rate mortgage holders are suffering and the directors are milking the bank.

The Minister should have taken the opportunity to tell them that they would all be gone unless they executed the policy that he wanted, one that he is now trying to force on them, namely, taking the board's foot off the throats of standard variable rate mortgage holders.

Finian McGrath (Dublin North Central, Independent)
Link to this: Individually | In context | Oireachtas source

Hear, hear.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | 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.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I have rarely heard a weaker case made in this House for bankers’ pay. I am not surprised and do not blame the Minister of State because he is carrying the can for a decision that was made elsewhere. I am not surprised to hear him state aggregate levels have gone down slightly. The fact is that he did not address the issue. How can he support an increase of 33% in the pay of the AIB chair? The profits he quotes are questionable. He knows that because it has a lot to do with what one allows for bad debts and how one provides for them. One can control the banks' profits. They made huge reductions, which are questionable this time, but the chairman got a 33% increase. That is not excusable at this time.

Consider the Minister of State's statement that 99% of investors voted in favour of the decision. He is correct in the case of the Bank of Ireland. In the case of AIB, 100% voted in favour of the decision, which was even worse. It is disingenuous for the Minister of State to say here that the shareholders voted in favour of the decision. He, and certainly whoever wrote his script, well know that the big shareholders are the people who voted. A vote by the small shareholders would certainly result in a large majority voting against the pay. The chairman of Bank of Ireland gets a lot more than the chairman of AIB. He gets €490,000 in a remuneration package. He is a man who, with the chairman of AIB, is simply a refuge from British banking. The United Kingdom is where they were found. Neither of them was wanted in the United Kingdom. They land over here and get huge sums of money, €500,000 per year in one case. That is inexcusable. The Minister voted in favour of Mr. Richie Boucher, the chief executive, getting a package of €843,000. Let us justify that.

Olivia Mitchell (Dublin South, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Deputy should not refer to people who are not here in a disparaging manner.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

I am sorry. It is a fact, though. The Minister did vote for the chief executive. I apologise if I was out of order.

We do not have an answer to these questions at a time when the Minister is also approving the banks' activities, which involve taking on, crucifying and punishing the standard variable rate mortgage holders. It is no good for the Minister to come in here and ask us to wait to see what happens next week. He had a great opportunity to say he would not vote favourably unless the bank did something about the unfortunate mortgage holders but he bottled it. He could have done what I describe, sacked the board and put in his own people who would change the policy of the banks.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I get confused sometimes as to what Deputy Ross would actually like to happen with the banks. Sometimes I cannot help but think that, unless he and Deputy Finian McGrath were running the banks, he would not be pleased with the performance of anybody running them. The reality is that the Government has to take a holistic view. Deputy Shane Ross talks about shareholders, the taxpayer and the small person. These are people who want to know that every cent of taxpayers' money pumped into the banking system, or at least into the live banks and not the zombie banks that Fianna Fáil put money into, will be recouped.

I have heard Deputy Ross speak eloquently and correctly about the need for more competition in the banking sector, yet he wants the Minister for Finance running around from bank to bank trying to run them. The banks are commercial entities. Our job is to get out of the business of owning banks, we do not want to own them. I have made it very clear to the Deputy in my initial response that some of the votes actually cast at the AGMs reduced the cost of directors' fees this year and last year.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

The aggregate cost.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Yes. The cost to the taxpayer was reduced.

Finian McGrath (Dublin North Central, Independent)
Link to this: Individually | In context | Oireachtas source

By €39,000.

Shane Ross (Dublin South, Independent)
Link to this: Individually | In context | Oireachtas source

By €39,000. Come on.

Simon Harris (Wicklow, Fine Gael)
Link to this: Individually | In context | Oireachtas source

We tend not to heckle during Topical Issue debates. The reduction seems to have been completely ignored.

In Bank of Ireland, to which the Deputy referred, we have a 14% shareholding. The State is a minority shareholder, yet we saw these resolutions passed by the overwhelmingly popular vote of shareholders. We want to get every single cent of money back out of our banking system. We are not giving up on the standard variable rate issue. Deputy Ross referred to the great chance the Minister had. The Minister has a process in place. We made it very clear in the Spring Economic Statement. The Minister will bring in the all the bank representatives next week and we will work on the issue. The rates are too high and need to come down. The Government is committed to that. However, it is easy to be populist in these matters. The Government cannot afford to be. It must get every cent of the money back for the taxpayer.

Finian McGrath (Dublin North Central, Independent)
Link to this: Individually | In context | Oireachtas source

Never be populist.