AIB chief says bonus ban bigger issue than €500,000 pay cap
Colin Hunt says issue affects far more people and bank’s competitors don’t face problem
AIB CEO Colin Hunt with chief financial officer Donal Galvin. The bank saw its average number of employees rise 2 per cent to 9,888 in the first half 2019. Photograph: Shane O’Neill/SON Photographic
AIB’s chief executive Colin Hunt has said that an effective ban on bonuses across bailed-out banks is having a greater impact on his group’s ability to hold on to staff than the €500,000 executive pay cap introduced a decade ago.
The comments come as bankers’ remuneration remains a hot political topic, with Minister of State for Financial Services Michael D’Arcy saying in an interview published earlier this week that both restrictions should remain in place.
That’s despite the fact that a Government-commissioned report on bankers’ remuneration, delivered to Minister for Finance Paschal Donohoe over five weeks ago, is said to advocate a relaxing of the constraints, as banks face difficulties hiring and retaining key staff at a time when a host of overseas financial firms move activities to Dublin from London amid Brexit.
“The pay cap impacts a tiny number of people,” said Mr Hunt, who became group chief executive in March, having previously led AIB’s wholesale and institutional banking division. “The big issue is the fact that we have an effective ban on variable pay. That affects far, far more people and our competitors don’t have that.”
The Central Bank advised Mr Donohoe in May that banks face the risk of losing staff in critical areas or with specialist skills in the areas of IT, risk, compliance and related functions to firms that are not the subject of remuneration restrictions.
AIB, which saw its average number of employees rise 2 per cent to 9,888 in the first half 2019 compared with the same period last year, may see its overall headcount decline in the coming years as it cuts contractors and consultants from its pay bill.
Mr Hunt said he aims to use full-time staff in its 1,500-strong bad loans division, known as the Financial Solutions Group (FSG), and the unit that has been working on the tracker mortgage examination, which has 500 people, to fill roles that will become vacant in the bank through natural attrition.
“The FSG unit is doing a great job. It is probably the most difficult part of the bank in which to work and we’ve got tremendous professionals doing an extraordinarily good job there,” he said. “And what I was doing in my old job, I was notorious for going into FSG to raid it for high-quality bankers, because the training they get there is absolutely exceptional.”
Meanwhile, Mr Hunt said he plans to unveil a new set of medium-term financial targets when he unveils his maiden set of full-year figures for the bank early next year.