Bank lobby presses review over pay cap and bonus ban

Time was when working in a bank was seen as a decent kind of a job with good money and good prospects. Now bankers say many potential recruits spurn job offers, arguing a Government €500,000 pay cap and bonus ban make it difficult to hire staff even for low-level posts.

In a submission to the Department of Finance calling for a “normalisation” of pay conditions, the lobby group for banks said the restrictions had also led to rising attrition rates for tech and other staff.

The paper from Banking & Payments Federation Ireland (BPFI) reflects growing discontent at pay restrictions imposed after the State spent €64 billion to rescue the sector more than a decade ago at the height of the financial crisis.

“Reported job offer refusal rates are around 15-20 per cent,” said the group, led by former Fine Gael TD Brian Hayes.

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“Interestingly, latest trends show that job offer refusals are increasing at entry level positions. Some of the cited reasons are lack of variable pay and lack of benefits, such as subsidised healthcare.”

The submission went to the department as part of its review of banking policy initiated by Minister for Finance Paschal Donohoe.

The federation said Irish retail bank workers and potential recruits were subject to Europe’s “most restrictive remuneration conditions” and were “clear outliers” compared with counterparts elsewhere in financial services and other sectors.

“This places Ireland’s retail banks at a considerable and growing disadvantage compared to other banks, IT companies and corporates,” it said.

“An analysis of the recent recruitment trends in the Irish retail banking show that there has been an upward trend in attrition rates, with significant pressure on areas where future talent demands are increasing. For example, attrition rates range from 8 per cent [to] 10 per cent in data sciences, 10 per cent to 15 per cent for data analytics and between 15 per cent and 20 per cent for cybersecurity roles.”

In exit surveys of staff leaving retail banks, 25-30 per cent indicated the attraction of reward with a new employer as a key reason for leaving. “Among senior staff that leave retail banks, indicative survey results show that between 40 per cent and 45 per cent receive variable pay as part of their remuneration package with their new employer,” it said.

“In addition to challenges faced by retail banks in terms of staff leaving, it is increasingly becoming more difficult to recruit new staff. For example, indicative data from executive search firms show that talent pool is sometimes reduced by up to 50 per cent mainly due to lack of a normal remuneration environment. This smaller talent pool in turn leads to extended recruitment timelines.”