Incoming chairman of Anglo Irish Bank Alan Dukes has defended the decision to award pay increases to 70 employees of the bank, which is expected to report the highest losses in Irish corporate history.
Mr Dukes said most of the staff in question had taken on extra responsibilities and were being paid accordingly.
"We're not talking about pay increases, we're talking about a limited number of people - 78 people - across the bank's whole operation who in a large majority have taken on extra responsibilities after we had voluntary redundancy programme under which up to 260 people have left the bank," Mr Dukes said.
"We have to make sure we have people in slots in the bank so we can continue to manage the operation effectively and reduce the level of risk."
Anglo has reduced its staff numbers to 1,240 from 1,800 partly due to the redundancy programme. It has also cut back on jobs with the sale of the bank’s operation in Austria, the transfer of staff to the bank’s internal unit monitoring loans moving to the National Asset Management Agency (Nama) and by not replacing staff who have left.
He said the staff in receipt of pay rises included 50 people at middle management level, 18 at entry grades and 10 people at senior grades.
"With the exception of a few who have got recognition for qualifications that they acquired during the year, all the others have taken on extra responsibilities and they are getting the rate for the job," he said.
"It's the same kind of thing that happens in the public service, and those things do happen."
Mr Dukes said the bank’s overall pay bill would not rise, and had reduced significantly due to the voluntary redundancy programme and the capping of executive salaries at the bank.
He said the bank's losses, which are believed to be in the region of €12 billion for the 15 months to December 31st, 2009, will be announced when Anglo's results are published next week.
Losses on bad loans amounting to about €14 billion mean that Anglo will report the highest losses ever reported by an Irish company.
The bank will get a new capital injection from the Government in the coming weeks.
Speaking in the Dáil this morning, Fine Gael party leader Enda Kenny said the pay rises could not be justified.
He claimed the Taoiseach Brian Cowen had the authority under Section 50 Credit Institutions (Financial Support) Scheme 2008 to instruct the bank not to pay the increases.
However, Mr Cowen said the legislation in question only covered the renumeration of senior management at Irish banking institutions and that other pay issues were a matter for management at individual banks.
"The issue here from the Government's point of view, irrespective of what emerges as a result of what has happened at that bank, we want to make sure that the taxpayer is protected to the greatest extent possible...the board enjoys the full confidence of the Government in seeking to do that serious task," said Mr Cowen.
Labour Party leader Eamon Gilmore dismissed the Taoiseach's claim tover responsiblity for pay rises and called on him to ensure Anglo Irish refrains from paying the increases until it is clear how much the losses from the bank will be.
"This is a matter for the Government because you own it. You are the head of a Government that nows owns a bank which apparently made €14 million in losses over the past 14 months and which has just announced it has given a pay increase to some of its staff," he said.
Sinn Féin finance spokesman Arthur Morgan said the proposed pay increases cannot be justified and
should not go ahead.
"The excuse that there has been a greater burden of responsibility put on these people is void when the additional work burden is being heaped on other front line public sector workers, such as nurses, who are stretched to capacity because of the recruitment embargo," he said.
"These pay rises must not go ahead," Mr Morgan added.
