Brian Lenihan: received legal advice

Anglo Irish Bank, Bank of Ireland and AIB are paying out bonuses as the year comes to a close after conceding there is no legal way to halt payments to those who earned deferred bonuses based on performance in previous years.

It is understood all three banks took legal advice on the issue of paying out deferred bonuses to managers, but as 2009 comes to a close payments have been made, with banks citing "contractual obligations" as the reason for making the payments, which are likely to amount to millions of euro across the three institutions.

It is understood the Department of Finance, led by minister Brian Lenihan, is aware of the issue of deferred bonuses and has also received legal advice on the matter.

Bank of Ireland said a number of "middle managers" had been paid deferred bonuses this year due to them because of their performance in previous financial years, to which they were contractually entitled.

AIB said in a statement provided last week its bonuses related to US staff.

"On foot of court proceedings in the US, AIB paid contractual bonuses entitlements to certain staff in the US in 2009, in respect of contractual bonus entitlements relating to 2008."

Anglo Irish Bank declined to comment, but the Sunday Tribune confirmed independently that staff have been paid bonuses.

Some staff were paid based on 2007 and 2008 performance, even though the bank was in serious trouble throughout 2008 and also under some scrutiny in late 2007.

It is understood the bank, following legal advice, has conceded the payments must be made. This is because a number of Anglo staff have contracts entitling them to bonuses once they exceed personal benchmarks.

Irish Life & Permanent said last week it paid some "small contract-based bonuses this year" based on performance in 2008. It said it normally makes decisions on bonuses in the New Year and would review the 2009 position in early 2010.

It said no senior executives received bonuses. EBS, a mutual building society, has taken a different approach to the other financial institutions.

"EBS will not be paying any bonuses, deferred or otherwise, to any categories of employees in 2009 or 2010," said the company.

It did not reveal whether its legal advice differed from that received by the other institutions.