Business Irish

Wednesday 21 November 2018

Pym hits out at bank executive pay restraints

Appeal: Richard Pym, chairman of AIB, called for salary caps for bankers to be raised. Photo: Shane O’Neill, SON Photographic
Appeal: Richard Pym, chairman of AIB, called for salary caps for bankers to be raised. Photo: Shane O’Neill, SON Photographic

David Chance

AIB chairman Richard Pym attacked controls on top executive pay at the bank just months after the Government voted down plans for a deferred bonus pot at the lender, which the State bailed out after the financial crisis to the tune of €21bn.

AIB has repeatedly pressed for salary caps for bankers to be raised and said that the post-Brexit entry of British financial institutions will cause staff to leave as they are not subject to caps.

"Sometimes it feels in AIB that we're the training ground for the rest of the competition, as it were," he told the Banking & Payments Federation Ireland (BPFI) annual conference in Dublin yesterday.

AIB is still 70pc owned by taxpayers, effectively handing Finance Minister Paschal Donohoe a veto over the bank's executive remuneration plans, something he exercised at the annual meeting earlier in April. Mr Donohoe has appointed consultants to look at the pay issue.

AIB management had tried to introduce deferred stock options for executives at the meeting.

Mr Pym told the banking conference that people had to "move on" from the hatred that was felt towards the banks for their role in the 2008 financial crisis that saw the State bail out the financial sector in what was one of the most expensive financial crises of the modern era.

"State control of the banking sector is normally an indication that the economy is not entirely open," Mr Pym, a bank restructuring veteran, said.

State finances still carry the scars of the financial crisis and debt is more than €200bn, or the equivalent of €42,000 for everyone in the State. Ireland's banking sector was given the thumbs up by ratings agency Moody's last week when it raised the industry's credit outlook to positive, thanks to a booming economy and rising wages and job numbers.

It noted that despite plans to sell more of the Government's stake in AIB, the bank would still likely benefit from a State backstop if it hit trouble again as it was such an important part of the financial system, even though new EU rules have shifted the onus for recapitalising banks onto shareholders and creditors.

AIB shares were trading at €4,398 by 3.30pm yesterday.

Irish Independent

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