CEO quits Allied Irish Bank as concerns are raised about Ireland’s banker salary cap
The chief executive of Irish state-owned bank Allied Irish Bank (AIB), Bernard Byrne, will step down as chief executive in 2019 amid industry concerns about a salary cap on bankers.
News of Byrne's departure comes only weeks after chief financial officer Mark Bourke said that he would be leaving the company early next year.
It is likely to stir up controversy about the Irish government's €500,000 (£443,000) salary cap, with group chairman Richard Pym claiming it is leading to high staff turnover.
Of today's announcement, Pym said: “It was a very grim day in my life when Bernard told me that he had an external opportunity which he wanted to pursue.
"The fact that it came so soon after the resignation of our CFO, Mark Bourke, made it doubly difficult."
Shares in AIB dropped nine per cent to €3.75 this morning in response to the news, but have since recovered to €3.98.
AIB was bailed out by the Irish state after the 2008 financial crash, leading to laws passed that capped salaries for senior staff at state-owned banks at €500,000.
AIB floated on the Irish stock exchange in June 2017, making the government roughly €3.4bn. The state still owns 71 per cent of AIB.
Senior figures at the bank have raised concerns that the cap is resulting in staff leaving for higher paid roles elsewhere.
Byrne recently said in an interview with The Irish Times that turnover of senior staff is higher than normal and accelerating as the Dublin market expands to accommodate overseas firms wanting an EU base post-Brexit.
Pym called AIB "the training ground for the rest of the competition”, and said that pay caps and a ban on performance-related pay had made it “very difficult” for Irish-owned banks.
In April, minister for finance Paschal Donohoe voted down a proposal by AIB to lift pay restrictions to allow it to offer a deferred annual share scheme that would award senior executives with shares up to the value of their salary.
A government review into banking remuneration is expected to be complete towards the end of the year.