Bank pay caps ‘huge concern’ for investors, Donohoe told
Heavy hitters highlight drop in AIB shares after Bernard Byrne resignation
Paschal Donohoe rejected an AIB plan to reinstate bonuses last year. Photograph: Laura Hutton
Irish bank pay caps and bonus restrictions are now a major worry, a group of investors have told the Minister for Finance Paschal Donohoe, as the Government weighs whether to ease pay caps at bailed-out lenders.
Mr Donohoe met a shareholder group brought together by Deutsche Bank in Dublin on November 22nd. At the meeting, investors told Mr Donohoe that restrictions on executive pay at AIB and other partly State-owned lenders are “now a huge concern”even as they recognised the political sensitivity around easing restrictions, according to an internal summary of feedback prepared for the Minister.
The documents were released to Bloomberg through a Freedom of Information Act request.
Even if bonuses are reinstated, payments over €20,000 would face an 89 per cent super tax.
Mr Donohoe rejected an AIB plan to reinstate bonuses last year. The Government has hired Korn/Ferry International to review the caps. While that review may recommend easing the constraints, Mr Donohoe said in January he had no
plans to ease the restrictions.
Before the November meeting, a briefing note prepared for Mr Donohoe highlighted that while the restrictions “are having an impact on recruitment and retention” for the banks, “the politics of this are very difficult” which left him unable to make “promises” in relation to the pay caps.
On the timing of future bank share sales, investors “took comfort” that Mr Donohoe remained committed to selling down the Government’s stakes according to the notes. He underlined it was important to execute “a series of successful transactions rather than focusing on getting the next one completed,” the summary said. – Bloomberg