Bankers’ bonuses should be reintroduced, Central Bank says

Ex-governor Philip Lane tells Minister that ‘variable pay’ is vital to retain critical staff

Outgoing Central Bank governor Philip Lane: ‘We believe there may be merit in allowing more enhanced flexibility with respect to remuneration’ of certain banking staff. Photograph: Clodagh Kilcoyne

The Central Bank has advised the Government that it should consider reintroducing bonuses for bankers working in "critical functions", The Irish Times has learned.

In a letter to Minister for Finance Paschal Donohoe, former Central Bank governor Philip Lane said there is a case for the reintroduction of bonuses – or "variable pay" – as banks are struggling to hold on to staff in the face of competition from big tech firms and other companies not subject to pay restrictions.

“We believe there may be merit in allowing more enhanced flexibility with respect to remuneration for such staff,” Mr Lane wrote last Friday in a letter to the Minister.

‘Remuneration restrictions’

“There is a risk of losing staff in critical functions or with specialist skills in the areas of IT, risk, compliance and related functions to firms that are not the subject of remuneration restrictions.”


He also warned that UK banks relocating to Ireland after Brexit could have their pick of Irish bank staff.

“These financial institutions are likely to offer more flexible and attractive remuneration structures than those currently available in the impacted banks,” Mr Lane wrote.

The governor of the Central Bank, who wrote the letter as one of his final acts before leaving office last week, was asked for his advice on the matter by Mr Donohoe, whose department has received a consultant’s report on bankers’ pay.

Jack Horgan-Jones

Jack Horgan-Jones

Jack Horgan-Jones is a Political Correspondent with The Irish Times