Minister for Finance Paschal Donohoe was criticised by members of the Oireachtas Finance Committee on Wednesday over his move this week to reintroduce bonuses and gradually lift a €500,000 executive pay cap across bailed-out banks.
Sinn Féin’s finance spokesman Pearse Doherty told the outgoing Minister that “people are shocked that your parting gift is a bonus for bankers”, especially given how the three taxpayer-rescued banks had “fought tooth and nail” against mortgage borrowers during the tracker mortgage scandal.
Solidarity-People Before Profit TD Mick Barry asked Mr Donohoe why he did not restrict the newly allowed bonuses of up to €20,000 across the three banks to those earning under €100,000.
Meanwhile, Labour Party finance spokesman Ged Nash said that it would be “unimaginable and unconscionable” that senior managers would benefit from an easing of remuneration restrictions before “ordinary banking staff”.
Some 48 per cent of the about 20,000 employees across Bank of Ireland, AIB and Permanent TSB (PTSB) are earning less than €50,000, while 75 per cent are on salaries below €75,000, according to Mr Donohoe, who is set to swap roles with Minster for Public Expenditure Michael McGrath in the coming weeks.
The reintroduction of bonuses of as much as €20,000 stretch to the limit allowed under laws introduced in 2011 that impose a prohibitive 89 per cent super tax on variable pay awarded above that threshold.
The relaxation of the restrictions, announced on Tuesday on foot of a recommendation in a Department of Finance review of the banking sector, also involves the removal of a crisis-era €500,000 pay cap at Bank of Ireland and a commitment that the Government will do the same at AIB and PTSB when its stake in each falls below an unspecified “appropriate level”. Bank of Ireland chief executives have long enjoyed salaries above the threshold at the discretion of successive finance ministers, as it avoided government control during the financial crisis.
Mr Donohoe reiterated at the committee meeting that the decision to relax the pay restrictions was due to the growing challenges that the three domestic banks are facing in hiring and retaining key staff amid competition for talent from other financial firms and technology groups operating in the State.
His comments came at committee session during which TDs and Senators were going through draft legislation that would make it easier for regulators to hold senior managers in banks and other financial firms to account for failings under their watch. The Minister said he hopes that the Central Bank (Individual Accountability Framework) Bill will pass through all stages of the Oireachtas before the Christmas recess, paving the way for the bank to put its planned rules out to consultation early next year.