Permanent TSB's ex-boss sues for €850,000 over his 'humiliating' departure

FORMER PERMANENT TSB chief executive David Guinane claims that he is entitled to a severance payment of over €866,000 following his departure from the bank in 2012.

In his High Court action, Guinane, who worked for PTSB for more than 25 years, makes several claims against the bank including that it is in breach of contract and that it denied him fair procedures during his departure from the lender.

He also claims he has a contractual right to a payment under the bank’s severance scheme, known as a voluntary severance scheme (VSS).

He further claims his reputation was damaged by his former employer and that the bank was negligent and in breach of its duty towards him.

PTSB denies the claims and says Guinane received what he was entitled to when he was made redundant.

Opening the case on Tuesday, Paul Anthony McDermot SC, for Guinane, said his client was CEO of Permanent TSB bank when it was part of the Irish Life & Permanent Group.

After the group was recapitalised by the state for €4 billion in 2011, the banking section was separated from Irish Life as part of the restructuring of the organisation.

As part of the restructuring, all senior positions in the banking entity were advertised. Counsel said this was a process through which Guinane, who had always been highly professional and a dedicated employee, had been left humiliated.

Many others in the organisation knew the position had been advertised before Guinane did, counsel said.

Guinane did apply for the role of chief executive in the new bank and went through two interviews, the second of which counsel said was “an illusion”.

The position was given to English banker Jeremy Masding in January 2012. Counsel said Guinane “found out by accident” he had not got the job and Masding had been appointed.

Permanent TSB CEO Jeremy Masding

The key issue

Due to his departure from the bank, Guinane says he was entitled, like other senior employees at PTSB, to a payment under the VSS. This entitlement was “the key issue” in the case, counsel said.

Counsel said payments under the VSS were based on the person’s salary and the number of years they worked at the bank.

In Guinane’s case, the payment he says he is due has been estimated at €866,000. However his client was offered a payment of €175,000 plus 11.5 months salary by the bank, which he refused.

Counsel said he was told that due to re-capitalisation of the bank the Minister for Finance had capped severance payments to senior staff.

Counsel said that while Guinane was told that any severance payment would have to be approved by the minister, it had appeared from the discovery of documents that the minister was never asked about any payment to his client.

The cap seemed to be a decision the bank took itself. The justification by the bank for the initial offer seemed to be based on a media report which said severance payments to senior employees at another state acquired bank had been capped at €175,000.

Guinane rejected that offer, which McDermott said was subsequently withdrawn by the bank. Counsel said Guinane informed Permanent TSB chairman Alan Cook he would take legal action.

It is Guinane’s case that Cook informed him that if he did so he would be “destroyed by the media” and that “the department would not back down”.

In its defence, the bank accepts that conversations took place between Cook and Guinane on the dates alleged, however it is denied that Cook made such statements to Guinane.

The bank represented by Paul Gallagher SC, denies the claims including that Guinane is entitled to a payment under the VSS after he was made redundant.

The case before Justice Leonie Reynolds continues and is expect to last for eight days.