Donal O’Donovan: Tracker scandal and banking culture will make it a hard sell
SIGNING off on a bonus bonanza for bankers will be politically toxic for whatever minister is in situ when the review ordered yesterday by Paschal Donohoe comes back with its findings.
For Fine Gael, already accused as being out of touch on housing, the risk is especially big.
Bonuses that in many cases were paid to bankers for decisions that only much later were seen to have cost billions were banished in the wake of the crash.
They are back on the agenda now thanks to the economic recovery and the difficulty that creates for banks retaining top executives.
Within the banking community, the return of significant funds to taxpayers is seen as justification for a relaxation of what are regarded as post-crash emergency rules.
Lots of investors think it is better when a greater share of bankers’ pay is in bonus form, as it is easier to slash if the bank does badly.
A review kicks the issue to touch in the short term, but it won’t go away. There is a strong case that senior executives at the main Irish banks are underpaid compared with their peers, which means shareholders, including the State, can’t be sure they’re getting the best talent.
AIB’s bid for the Irish arm of specialist bank Investec came a cropper in part because merchant bankers baulked at being brought into the salary cap regime.
AIB boss Bernard Byrne’s pay, for running the vitally important lender, is significantly less than Greencore chief executive Patrick Coveney gets for running what’s at the end of the day a very big sandwich maker.
But the public are right to be wary.
If a shares bonus scheme had been in place five or 10 years ago, bankers who signed off on what we now know was a €1bn tracker mortgage scandal would have cashed out long before that bill landed.
No sensible minister will sign off on pay hikes, at least until the Central Bank has finished its review that’s trying to figure out why the culture and behaviour in those banks remains so resistant to doing the right thing by customers.