Finance Minister Paschal Donohoe was told a discussion on pay caps and the “super-tax” on bonuses at AIB is likely to rear its head as the state’s share in the bank approaches zero.
In a submission on the latest sale of the government stake in the bank, officials said there was no legal requirement to change the compensation cap as long as the state remained a shareholder.
It said a further disposal of shares could take place before a conversation on pay and perks was necessary with AIB.
The submission said however: “Notwithstanding this, we will need to normalise the relationship between the State and AIB as our shareholding continues to reduce towards zero.
“[This] means considering the removal of the crisis-era measures (compensation cap, super tax etc) which continue to be still in place.”
A Department of Finance submission from mid-January said there was a lengthy window for a further sale of the state’s stake in AIB before their annual financial results on March 5.
It said officials were looking at a deal of around 5 percent of the bank, which could yield up to €669 million in return.
The submission said AIB had been one of the best performing banks in Europe through 2024 and that the department “should take advantage of this share price strength.”
The document added: “Should the AIB share price weaken ahead of the launch date or if market conditions are not favourable then we will postpone this transaction and look at it again following AIB’s 2024 annual financial results.”
Minister Donohoe was advised he would need to have “political clearance” for the sale on the final weekend of January.
It said this would leave a “clear path” for the department to move quickly and “take advantage of market conditions.”
Officials did warn however, of the possibility of sudden volatility or a leak and how this could lead to a halt of the latest AIB share sale.
“This happened [to] the U.K. government during Summer 2021 on Natwest,” the submission added.
In a note, Minister Donohoe – who had been reappointed days before – wrote “excellent work and look forward to catching up with the team soon.”