<div><p>Irish Finance Minister Brian Lenihan on Tuesday rejected a request from Allied Irish Bank to pay a new boss in excess of a salary guideline cap of 500,000 euros (745,000 dollars).</p><p>Allied Irish Bank (AIB), Ireland's biggest bank, which is 25 percent owned by the state after a 3.5-billion-euro bailout, had submitted a pay request on Monday for Lenihan's approval.</p><p>The Irish Times newspaper earlier reported that senior AIB executive Colm Doherty had been proposed as the new managing director at the 633,000-euro salary which he was also paid last year.</p><p>However, after a cabinet meeting, Lenihan said Tuesday that the Irish government was "not willing to break with the established guideline in this case."</p><p>"That was my position, that's the position of the government and that's where the matter stands," Lenihan told RTE state radio.</p><p>Last February, the Covered Institutions Remuneration Oversight Committee (CIROC) recommended the AIB chief executive salary should be capped at about 690,000 euros. It had stood at 928,400 euros in 2007.</p><p>CIROC, a government body, oversees the salaries of bosses at financial institutions that are covered by a state guarantee.</p><p>Lenihan had lowered the salary cap to 500,000 euros and said any deviation "should take place only in very exceptional circumstances and with his agreement".</p><p>The salary row comes as the government prepares for a severe austerity budget next month that is widely expected to involve four billion euros in large public spending cuts and increases in taxation.</p><p>Lenihan said Tuesday that Ireland had to "make such an adjustment as a country" and the banks had to be part of that.</p><p>"In this case, for example, it seems unfair that a person has to reduce their salary to take an executive position in a bank but the reason for that is that existing appointees were not affected by the salary cap," he added.</p><p>He noted that a new chief executive for the country's second biggest bank, Bank of Ireland, had taken a pay cut of about a third.</p><p>Lenihan said he had also expressed a preference to AIB that it appoints an external candidate to its top job.</p><p>But he also conceded there may be connection between the salary cap and the lack of suitable external candidates.</p><p>The Irish banking sector was ravaged by the global financial crisis, a domestic property market meltdown and a deep recession.</p><p>AIB and the second-biggest lender, Bank of Ireland, have each received a 3.5-billion-euro capital injection from the government.</p><p>Anglo Irish, Ireland's third biggest bank, was nationalised in January and has received a 3-billion-euro recapitalisation from the government.</p><p>The Irish state also plans a "bad bank", the National Assets Management Agency (NAMA), to buy toxic bank property loans with a total book value of 77 billion euros which soured in the country's recession. NAMA will use taxpayers' money to buy the loans at a discount.</p><p>Lenihan estimates that 24 billion euros of AIB loans will be transferring to NAMA.</p><img src="http://admatch-syndication.mochila.com/images/ad.gif?aid=63617527&bid=informcom" /></div><div id="copyright"><div>

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