Bank chief to take €1.5m drop in pay
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Monday February 09 2009
BANK of Ireland chief executive Brian Goggin is set to suffer a massive €1.5m drop in salary.
The cut, amounting to 50pc of his pay and perks, applies to Mr Goggin's package for 2008. The bank only declares salary details of senior executives in March of the following year.
Mr Goggin's last published salary was for the 2007 financial year, when he earned €3m, which included €1m in bonuses.
Although he is due to retire in June, the decision to cut his salary will set a lower benchmark for his successor.
Details of the cuts come as the Cabinet prepares to approve an injection of €7bn in taxpayers' funds for the two big banks.
Rival Allied Irish Banks (AIB) has already said both its chief executive and chairman would take major salary cuts.
The decision to cut Mr Goggin's salary will take pressure off Taoiseach Brian Cowen, who is anxious to show the massive recapitalisation does not represent a "no strings" rescue by the taxpayer.
The Government is keen to link its bailout plan to some pain for bank chiefs.
Mr Goggin has been chief executive of Bank of Ireland since June 2004 and was key in persuading Finance Minister Brian Lenihan to provide the €400bn bank guarantee late last year.
The Government is expected to sign off on the gigantic €7bn bailout for the main banks tomorrow, although Mr Lenihan said last night further discussions still had to take place. He told RTE's 'The Week in Politics' programme the Government was seeking guarantees that credit for businesses would be available soon. He said a stay on the repossessions of homes and a dramatic reduction in pay for banking executives would also be required.
Yesterday, Green Party ministers John Gormley and Eamon Ryan called for senior bank salaries to be rapidly reined in.
Mr Cowen has already said they "should" drop by at least 25pc.
Mr Gormley said he believed the levels of executive pay had to be "slashed substantially".
Mr Ryan said the payment of huge packages to leading bankers had to end. "People have got to knuckle down and help to resolve the situation we are in, without earning these huge sums of money."
And Fine Gael has called on the Government to force the banks to implement a pay freeze for staff. Leader Enda Kenny said any recapitalisation must get credit flowing again to Irish business and guarantee that taxpayers "are not bailing out international financial speculators who funded reckless lending by banks".
Contracts
However, it has emerged that the two bailout banks told the Government they could not break the contracts of those with super-salaries, which, in some cases, have many months to run. In the boom years, senior bankers earned most of their income through contractual bonuses which the banks now claim are untouchable.
AIB chief Eugene Sheehy had a nominal salary of €450,000 in 2007, but received a bonus of €850,000. Mr Sheehy and bank chairman Dermot Gleeson will take a 10pc salary cut, it was announced last month, and Mr Sheehy will lose his €850,000 annual bonus -- an overall reduction of 45pc.
A committee set up to examine the pay and bonuses of top bankers is not expected to report for another three weeks, compounding the Government's immediate problem of selling the recapitalisation to the public.
Meanwhile the British treasury has ordered an independent inquiry into how banks are managed.
The move comes amid reports that big bonuses, almost £1bn, are to be paid to staff by the Royal Bank of Scotland (RBS). A spokesperson for Ulster Bank, whose parent bank is RBS, said no decision had been taken in respect of bonuses to its executives.
- Brendan Keenan and Senan Molony
