The row over the appointment of a new boss to AIB has worsened with the latest rift between the Government and the bank over rates of pay for its new managing director.
The Minister for Finance, Brian Lenihan, has said he has not approved a proposal from the bank for a salary level which would breach the Government's cap on bankers' pay.
The Department of Finance capped the pay of the chief executives of AIB and Bank of Ireland at €500,000 earlier this year.
Speaking on RTÉ's News at One, Mr Lenihan said the Government's cap on bankers' pay will not be broken depite a proposal by AIB that its new managing director will be paid €630,000.
Mr Lenihan said the issue was discussed at a Cabinet meeting this morning.
He said: 'The Department of Finance received a request to exceed the guideline in a particular case. I considered the matter, but made no decision on the matter. I brought it to my Cabinet colleagues and the Government are not willing to break with the established guidelines.
'The Government never sanctioned the salary. I can't account why this is in the public domain but I can tell you that there is a clear position, as far as the Government is concerned, that the guideline will not be breached.'
Mr Lenihan was also critical of media coverage.
He said: 'One of the reasons it is very difficult to get people to manage an Irish bank from outside the system is not just because of the salary cap, is the kind of inaccurate commentary and leaping to judgements about appointments which candidly does not help the institutions themselves to find suitable personnel for an appointment.'
He added the cap which limits pay to €500,000 will not be breached.
AIB wanted to fill the role of its outgoing boss Eugene Sheehy with an internal candidate. But the Government wanted an outsider to bring in fresh blood.
As a compromise, chairman Dan O'Connor is to get the dual roles of chief executive and chairman as an interim measure.
The bank's head of capital markets, Colm Doherty, had been the bank's choice as chief executive, but he will have to be happy with the slightly lesser title of managing director.
But the bank has proposed that Mr Doherty retain his existing salary of €630,000 in breach of the pay cap.
This morning Finance Minister Brian Lenihan denied that he had approved AIB's proposed salary for Mr Doherty. He said any suggestion he had gone along with the measure was inaccurate.
Shares in AIB closed down 2.8% this evening.
