Tommy Broughan (Dublin North East, Labour)
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Question 62: To ask the Minister for Finance his views on the bankers salary cap in relation to the search for a new chief executive officer for the Allied Irish Bank; and if he will make a statement on the matter. [25482/11]

Michael McGrath (Cork South Central, Fianna Fail)
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Question 70: To ask the Minister for Finance if he will provide details of his contacts in recent weeks with AIB in relation to the appointment of a new chief executive; if the bank has requested permission to award a salary in excess of €500,000 to the new chief executive; and his views on the appropriate salary that should be paid. [25499/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 62 and 70 together.

As I have stated in reply to previous questions on this subject, I am keen that a successful outcome regarding the appointment of a new CEO at AIB is achieved shortly as that bank is a fundamental part of the announced Government strategy to restructure the banking sector and any proposed appointee would play a pivotal part in this process. Additionally, I am anxious that the situation whereby the Executive Chairman of AIB combines both positions of Chairman and CEO is resolved.

The Executive Chairman of AIB has kept my Department apprised of developments in the search for a new appointment.

I have, within the last few days, received a formal proposal from AIB for a remuneration package for the post of CEO which includes a request for a base salary to be paid in excess of the Government agreed cap of €500,000.

However, it is the view of the Government that a compelling case would have to be made for the Government to consider setting aside this cap taking account of the recent decision on the pay ceilings for CEOs of Semi States and Senior Public Sector posts and the need for social solidarity to be shown by all individuals and sectors for the good of the nation and its recovery from the present challenging circumstances.

I will examine the AIB request in that context.

Tommy Broughan (Dublin North East, Labour)
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Question 63: To ask the Minister for Finance the position regarding the ongoing merger between EBS and AIB; if EBS corporate governance structures and culture are going to be maintained after the merger has fully taken place; if he is concerned about the significant reduction in the mutual model in Irish banking; and if he will make a statement on the matter. [25483/11]

Michael Noonan (Limerick City, Fine Gael)
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The legal merger of AIB and EBS was completed on 1st July 2011. Since then, AIB and EBS have been working in close collaboration to gain a fuller understanding of the EBS business operating model, its products and services, its technology infrastructure, the capabilities of its people and its culture. The two institutions, in discussion with my officials, are also in the process of considering the various options for integrating the two businesses, with a particular emphasis on sustaining the current customer proposition and ensuring the retention and growth of customer deposits in light of the commitments of both AIB and EBS to reduce their loan to deposit ratios significantly over time. These discussions are still ongoing and will be communicated publicly by the banks in due course, once the respective boards and executive management teams have concluded their strategic review. EBS is operating under a separate banking licence from the Central Bank of Ireland and all of the necessary governance structures required by that licence are being maintained. In terms of culture, EBS maintains significant expertise, practices and processes from which the wider AIB organisation can learn. AIB have informed me that they will look to harness these capabilities across the bank as they develop their integration plans for the two businesses.

The banking crisis has clearly demonstrated that the legacy banking model in Ireland was fundamentally flawed and was not fit for purpose. The radical restructuring of the banking system I announced on 31 March 2011 was designed to create, over both the short and long term, a banking system which can facilitate the needs to the Irish economy as the country emerges from this unprecedented period of turbulence. The merger of EBS with AIB to form one of the two pillar banks in the domestic economy is a vital part of this restructuring process and was necessary to stabilise the financial system. As the Irish economy returns to growth it is imperative that a right sized and competitive banking system emerges which is able to meet the demands of the economy. In time, there would appear to be no reason why the traditional mutual model could not play a role in this system provided such institutions are appropriately managed and controlled.