The Financial Services Union (FSU) has welcomed news that Minister for Finance Paschal Donohoe will seek approval from Government colleagues on Tuesday to allow bailed-out banks to pay bonuses of up to €20,000 and put lenders on a path to free themselves from executive pay restrictions.
The outgoing Minister also plans, on foot of recommendations in a retail banking review report, to allow banks pay non-pay benefits, such as subsidised health and child care, which have effectively been banned since the financial crisis.
Mr Donohoe plans to remove executive pay restrictions at Bank of Ireland, after it sold its remaining shares in the lender in September and lift an ongoing €500,000 pay cap at AIB and Permanent TSB, once the Government’s take falls to what are being called as appropriate levels.
FSU general secretary John O’Connell said that allowing variable pay of up to €20,000 – the maximum amount the Government has discretion to allow without changing an 11-year-old law that imposes a prohibitive 89 per cent tax on bonuses above that level – is a “very welcome development”.
“Staff in the retail banks should not be treated differently to other staff working in the wider financial services sector who have access to financial assistance with healthcare and childcare costs and access to approved profit-sharing schemes among other benefits,” Mr O’Connell said.
“The FSU submission to the banking review called for this action to be taken and for any additional pay or benefits to be agreed between the union and the banks so ordinary bank staff can be justly rewarded for their professionalism and skill sets.”
Bank lobbyists have argued that the pay restrictions had already put the domestic banks at a competitive disadvantage in attracting talent, as they compete with international banks in Dublin and, increasingly, technology companies for key staff.
However, Sinn Féin’s finance spokesman Finance Pearse Doherty has described the move as “tone deaf”.
“As households continue to struggle with the cost of living, reports that the Minister for Finance plans to lift pay restriction for senior bankers is a kick in the teeth for hard-pressed families,” he said.
“These restrictions were put in place as a result of the reckless actions of senior bankers which led to the financial crisis – bankers who prioritised their own pay above the needs of consumers and society.”
Mr Doherty noted that AIB and Bank of Ireland were fined a combined a combined €197.2 million for their roles in the tracker overcharging scandal this year. PTSB was fined €21 million in 2019.
Socialist Party TD and Oireachtas Finance Committee member Mick Barry described the move as “an insult to households across the country that are grappling with the cost of living crisis”.
Mr Barry has proposed that an emergency meeting of the committee be organised with an invite to the Minister for Finance to address it and take questions on the issue