Minister for Finance Paschal Donohoe didn't need to be at his most politically astute this week when he kiboshed AIB's attempt to reintroduce bonuses for bankers.
Almost a decade has passed since the State bailed out the then crippled institution to the tune of €20.8 billion and, while the bank is in a much healthier position than in those dark days of September 2008, nobody has forgotten.
Despite reducing its portfolio of impaired loans by almost 80 per cent since the €29 billion peak of 2013, the bank is still faced with the toxic publicity that surrounds the offloading by the banks of distressed loans to vulture funds, as well as the tracker mortgage scandal.
None of that stopped AIB from proposing the establishment of a share incentive scheme, starting in 2019, that would entitle senior management to deferred shares of up to 100 per cent of their salary a year. Cue alarm bells on Merrion Street.
Donohoe, who as Minister for Finance still owns 71 per cent of the bank, used his stake to shoot down the proposal at this week’s annual general meeting.
Talent in straitjacket
AIB chief executive Bernard Byrne later told reporters of the woes of attracting and retaining top talent in such a straitjacket. He said the group had lost more than 20 senior executives over the past five years. "That's quite a lot," he pointed out.
On the same day, the Central Bank said an additional 3,400 loans had been identified as having been caught up in the tracker scandal. AIB and Ulster Bank later owned up to being responsible for almost all of these cases. The scandal was blamed for a 66 per cent slump in Ulster Bank’s operating profit for the first quarter.
Customer confidence at Ulster Bank took another hit early in the week when money began to disappear from significant numbers of customer accounts. Human error was blamed and the matter later resolved, but many people were seething.
Senior RBS official Jane Howard, whom the bank is believed to be lining up as its next chief executive, will have her work cut out for her.
Meanwhile, a plan by Permanent TSB to reclassify 4,300 non-performing loans as split mortgages and pull them from a portfolio sale was complicated by the European Central Bank, which laid down a number of conditions.
Over at Bank of Ireland, there was bad news for staff as new chief Francesca McDonagh continued her cull. Plans were announced to close 27 back-office service centres around the State, affecting 420 employees.
SHADY GOINGS ON
Tax avoidance was described as the “child labour issue of our generation” by Sinn Féin MEP Matt Carthy this week. Companies, he said, do not wish to be associated with shady goings on just to save a quick buck.
He might be right about the moral parallels, but there was further evidence this week that many foreign companies still see the Republic as a conduit through which to siphon profits and avoid higher rates of tax elsewhere.
First, it emerged that rail companies all over Europe, including in the Netherlands, Germany, Russia, France and the United Kingdom, have been using the State for such purposes.
Apple, of course, has already been caught in the European Commission's crosshairs, and is poised now to place the first tranche of its €13 billion tax bill in an escrow account next month following the signing of a legal agreement with the Government.
Tax loophole
It also emerged that the Government’s incentive to attract foreign investment after the closure of the “double Irish” tax loophole has resulted in claims of only €5 million in its first year of operation. The Knowledge Development Box was introduced by the Government in October 2015. It offered relief to income from qualifying patents, computer programmes and certain other intellectual property.
On the other side of the coin, Revenue has moved to stop Irish individuals and firms from avoiding paying their taxes here. Its annual report this week showed it collected almost €500 million following tax audits and moves to ensure tax compliance in 2017.
Overall, it collected €50.76 billion in tax last year, up €2.8 billion on 2016. A separate study on corporation tax showed that 80 per cent comes from multinationals and that 39 per cent of tax comes from just 10 companies, up from 37 per cent in 2016.
AERIAL INFRASTRUCTURE
With Britain less than a year away from exiting the European Union, the State’s connectivity with the rest of the world has never been more pertinent.
Dublin Airport is getting a new runway, but its operator, DAA, has said the facility will lose 2.4 million passengers “overnight” if conditions attached to the planning approval to limit night-time activity at the airport in order to keep the locals happy are not eased.
DAA chief executive Dalton Philips said the mooted restrictions would be “catastrophic” for the economy. He was speaking as DAA announced an increase in profit after tax before exceptional items of 16 per cent last year to €125 million.
Dublin to Hong Kong
Meanwhile, Cathay Pacific, which recently announced plans to begin flying between Dublin and Hong Kong in June, said it was “very encouraged” by advance bookings for what will be the Republic’s first non-stop service to the far east.
Ryanair, for its part, is to buy 25 Boeing 737 MAX 200 aircraft, in a move that will allow it to grow its traffic to 200 million customers a year by 2024.
In the North, French group Vinci is to buy Belfast International Airport as part of a deal to acquire nine airports and three management contracts in the United States, Costa Rica, Northern Ireland and Sweden.
