Friday 15 November 2019

€500,000 cap on banker pay could rise

Donal O'Donovan and Charlie Weston

The €500,000 cap on bankers' annual pay could be increased for the first time since the financial crash, the Irish Independent has learned.

The Government has hired outside consultants Mercer to undertake a review of pay at all levels in the bailed-out banks.

The news comes despite the banks remaining under pressure for failing to tackle the mortgage crisis.

Taoiseach Enda Kenny and Finance Minister Michael Noonan both backed the new tough approach to the lenders.

However, the Irish Independent understands that Canada-based salary "benchmarking" specialist Mercer Group has begun a review of bankers' pay after winning the contract in recent days.

It will look at pay scales at all levels in the so-called "covered banks" that benefit from explicit state support, including AIB, Bank of Ireland and IBRC (the former Anglo Irish Bank).

It raises the prospect of pay hikes for top bankers.

That will be welcomed by senior figures in the industry who regard salary caps as a barrier to hiring top talent.

However, any such move would anger taxpayers still picking up the €64bn tab to bail out reckless lenders.

The review is called for under the Programme for Government and in theory pay scales could be moved up or down when a report is finalised in two months.

However, the Government has a track record of bowing to pressure to pay above its own agreed limits.

The new deputy governor of the Central Bank, Stefan Gerlach, last year secured a pay deal of €250,000 despite a notional €200,000 limit on public sector wages.

Pay rates for some government advisers are now far in excess of the supposed rate.

Looking at pay without examining "performance targets" and the wider banking culture would be a missed opportunity, a spokesman for the Irish Bank Officials' Association said.

Pay limits were first imposed back in 2009, when the late Brian Lenihan, as finance minister, set €500,000 as a maximum salary for executives, but allowed pension and other benefits to be paid in addition to the "basic" pay.

Mr Noonan took a harder stance, imposing an absolute pay limit of €500,000, including all benefits.

Mr Kenny and Mr Noonan backed senior officials who criticised the banks for being in denial about the extent of the mortgage problem.

Mr Kenny also threatened to bring in further legislation to force the banks' hands if the Financial Regulator asked for extra powers.

Irish Independent

Also in Business