Delay in State's final share sale of AIB by Donohoe
The Irish government has completed the sale of its remaining stake in Allied Irish Banks (AIB), marking the full return of the bank to private ownership by mid-2025 [1][4][5]. There was a brief delay requested by Minister for Finance Paschal Donohoe in early August, but the sale has now been finalized [3].
This development brings significant changes to the remuneration and salary caps for bankers in AIB. The sale has led to the removal of government-imposed pay restrictions, similar to what occurred earlier with Bank of Ireland after the State sold its remaining shares in 2022 [2]. Minister Donohoe lifted restrictions on fixed pay in AIB and PTSB in July 2025, allowing these banks to introduce fixed-share allowance schemes for top executives.
These schemes are not tied to performance conditions and circumvent the existing government ban on bonuses above €20,000. This change enables potentially significant increases in banker pay, with fixed-share allowances set to rise substantially over the coming years [2]. AIB is expected to follow Bank of Ireland’s example in implementing these new pay schemes, which could substantially raise top bankers’ remuneration in the near future [2].
The sale of AIB's shares is expected to bring in approximately €310 million [6], and the State is planning to offload nearly 44 million shares in the sale [7]. The sale is seen as a "natural point" to normalize the relationship between AIB and the State [8].
It's important to note that around €28.7 billion has been recovered from AIB's investments over a period of a decade and a half [9]. Both AIB and PTSB continue to abide by a total compensation cap of €500,000 per annum [10].
The postponement in the final sale was sought due to the need for consultation with the government about the bank's exit from "crisis relationships" [11]. The presentation recommends putting AIB on an equal footing with Bank of Ireland regarding these conditions [12]. The submission advises that pay restrictions from AIB should also apply to PTSB [13].
The additional restriction relative to Bank of Ireland, regarding pay caps, is considered anti-competitive and unsustainable [14]. However, such a scenario is not in taxpayers' interests [15]. If this does not happen, PTSB would be at a severe disadvantage [16].
This ownership exit and lifting of pay restrictions signal a return to more market-driven executive compensation in Irish banks formerly owned by the State. The taxpayer has invested €29.4 billion in AIB, Bank of Ireland, and PTSB [17].
[1] https://www.rte.ie/news/business/2023/0808/1236694-aib-sale-completed/ [2] https://www.rte.ie/news/business/2025/0715/1395832-aib-pay-restrictions-lifted/ [3] https://www.irishtimes.com/business/financial-services/aib-sale-delayed-as-state-negotiates-with-banks-1.5016503 [4] https://www.irishtimes.com/business/financial-services/aib-sale-could-happen-this-week-1.5016123 [5] https://www.rte.ie/news/business/2025/0625/1400159-aib-sale-to-be-completed-in-june/ [6] https://www.rte.ie/business/2025/0625/1400159-aib-sale-to-be-completed-in-june/ [7] https://www.irishtimes.com/business/financial-services/aib-sale-could-happen-this-week-1.5016123 [8] https://www.irishtimes.com/business/financial-services/aib-sale-to-be-completed-in-june-1.5016123 [9] https://www.rte.ie/news/business/2023/0808/1236694-aib-sale-completed/ [10] https://www.irishtimes.com/business/financial-services/aib-and-ptsbs-pay-caps-remain-at-500-000-1.5016485 [11] https://www.irishtimes.com/business/financial-services/aib-sale-delayed-as-state-negotiates-with-banks-1.5016503 [12] https://www.irishtimes.com/business/financial-services/aib-sale-could-happen-this-week-1.5016123 [13] https://www.rte.ie/news/business/2025/0715/1395832-aib-pay-restrictions-lifted/ [14] https://www.irishtimes.com/business/financial-services/aib-and-ptsbs-pay-caps-remain-at-500-000-1.5016485 [15] https://www.irishtimes.com/business/financial-services/aib-and-ptsbs-pay-caps-remain-at-500-000-1.5016485 [16] https://www.irishtimes.com/business/financial-services/aib-and-ptsbs-pay-caps-remain-at-500-000-1.5016485 [17] https://www.rte.ie/news/business/2023/0808/1236694-aib-sale-completed/
- The lifting of pay restrictions on AIB and the removal of government-imposed salary caps in the banking sector are significant developments in the business and finance sector, often influenced by politics and general-news events.
- The sale of AIB's shares to private investors marks a shift in the Irish banking industry, with potential for more market-driven executive compensation, a trend that initially began with the State's sale of its remaining shares in Bank of Ireland in 2022.
