FG accuses Government of 'bottling it' on top bankers' pay

 

Irish Life and Permanent today confirmed changes to its awarding of executive bonuses and salary freezes.

The company said bonuses will not be paid to its 160 managers - including executive directors Denis Casey, Peter Fitzpatrick and Kevin Murphy.

In 2007 the executive directors received around €1.4 million in bonuses between them.

All manager grades will have their salaries frozen while for other staff, all bonuses due for 2008 will be cut by 75 per cent.

Irish Life and Permanent said that after an independent review in March of last year, the salary of chairwoman Gillian Bowler was set at €420,000 per year, but the bank said she waived her entitlement to the fee and received €288,000.

Earlier today, Fine Gael accused the Government of "bottling it" on cutting executive pay in the banking sector ahead of a €7 billion recapitalisation of AIB and Bank of Ireland.

Fine Gael enterprise spokesman Leo Varadkar accused the Government of sending mixed signals on the issue of pay cuts.

"The Government has belatedly started talking tough about pay restraint in the banking sector and has secured many headlines as a result. But now it appears the Government is bottling it when it comes to forcing pay cuts for senior bankers when Eamon Ryan in media interviews started using legal arguments as a basis for not being able to force pay reductions.

“John Gormley is still talking about pay cuts, yet his colleague Eamon Ryan, in other media interviews, is already rowing back on this proposal, citing ‘complex’ and ‘legal aspects’.

“Pay restraint in the sector and pay cuts for top executives must be part of any recapitalisation plan," he added.

Minister for Finance Brian Lenihan, speaking on RTÉ's The Week in Politicsprogramme yesterday, said the deal was not finalised and referred to senior executive pay in banks, which has been the subject of much public anger and criticism.

He also said he would seek more credit for businesses and a stay on home repossessions, before consenting to the €7 billion plan.

This morning the Fine Gael leader Enda Kenny urged caution at the plan and said it needs to “send out a signal to international markets that there is trust and confidence in the Irish banking system”.

Mr Kenny said the plan “shouldn’t be about the protection of golden circles or justifying executive decisions” but instead needs to go to small businesses as they are under “extreme pressure”.

Mr Kenny also called on the Government to inform the Opposition about the details of the recapitalisation plan.

“We need to know the extent of the liability and truth of it,” he added.

Minister for Social and Family Affairs Mary Hanafin said some of the salaries and bonuses that have been given to bank officials are “absolutely outrageous”.

She said: “I read of one chief executive who got €2 million in one year that is an outrageous amount of money for anyone to earn in this country.”

Ms Hanafin said the banking sector is “absolutely crucial” for the future strength and stability of our economy.

“We have to support the banks so that the banks will support our economy but with that comes three conditions - lend to small and medium-sized enterprises, security to home owners and they cut their own executive pay.”

Labour Party leader Eamon Gilmore said the plan had to work or the taxpayer would have to pay the price.

“If this does not work, the Irish economy will be in awfully serious trouble and the State will be in awfully serious trouble,” said Mr Gilmore.

Sinn Féin economic spokesman Arthur Morgan called for senior executives to return bonuses paid over the past three years, along with a portion of their salaries before receiving aid from the Government.

Mr Morgan also called for the Government to amalgamate AIB and Bank of Ireland as a single public bank.

Social housing group Respond today welcomes plans to recapitalise the State’s main banks but called for systems to be put in place that will allow families in arrears to renegotiate their mortgage.

Respond Company Treasurer John Hannigan said a free legal advocacy support system needs to be put in place to which people who face repossession can access when dealing with their bank.

“We urge that the scheme be enlarged to include not only those already engaged in legal proceedings, but anyone with mortgage arrears in excess of three months,” he added.

The decision on recapitalisation is expected to be made by the Cabinet at its meeting tomorrow. The decision is now unlikely to be announced until Wednesday or later.