Paschal Donohoe defends banker pay changes as necessary for Irish-owned banks to compete

Minister for Finance challenged over changes for institutions soon after tracker mortgage scandal

The three Irish-owned banks are facing competition in the recruitment of senior executives from 30 other banks operating in Ireland, Minister for Finance Paschal Donohoe has said.

Renewing his defence of the Government’s relaxation of salary caps and increased bonus payments Mr Donohoe said there were now just three Irish-owned banks left and other banks would outbid them for top quality executive.

“That’s the reality we are in,” he told Social Democrats joint leader Róisín Shortall in the Dáil.

Bank of Ireland is the only financial institution where the pay cap has ended, he said. It had repaid its entire bailout funds as well as an extra €2 billion. AIB and Permanent TSB pay caps will be phased out as the State sells its shares in these institutions.


But Ms Shortall said the tracker mortgage scandal had shown that senior Irish bankers have not learned the harsh lessons of the 2008 banking crash and the taxpayer-funded bailout.

She said it seemed that “no self-respecting high-flying banker will work for less than half a million euro”, which was more than twice the Taoiseach’s salary.

The Dublin Northwest TD said the Minister’s decision was “especially galling” for families affected by the tracker mortgage scandal as she asked what proof existed that banks had learned any lessons.

Customers had lost their homes and lives were destroyed and it was an insult during a cost of living crisis to working people to remove the salary cap.

She added that there was no evidence that extravagant salaries improved service to ordinary citizens or raised ethical standards.

Ms Shortall pointed out that AIB had been fined €96 million this year over the tracker mortgage debacle and Bank of Ireland €100 million.

Highlighting the salaries of previous chief executives she said then Bank of Ireland CEO Brian Goggin was paid €4 million in 2006. And the bank had to get a €5 billion bailout subsequently.

She said that in the same year AIB’s Brian Sheehy was paid “a more modest” €2.5 million and the bank claimed it needed an improved ethical and high performance culture. But she said the State had to bail that bank out to the tune of €21 billion.

Marie O'Halloran

Marie O'Halloran

Marie O'Halloran is Parliamentary Correspondent of The Irish Times