Staff at bailed-out banks now facing Croke Park-style pay cuts
THERE is mounting speculation that more than 20,000 staff at bailed-out banks could face pay cuts in line with the Croke Park II agreement for the public sector.
Anticipation of a cut increased after Finance Minister Michael Noonan asked John Corrigan, the head of the National Treasury Management Agency, to cut salaries at the agency in line with the Croke Park II deal. Pay at the banks will be discussed at Cabinet in the coming weeks when the findings of long-awaited review of pay levels at the lenders is due to be presented to ministers.
The Government has no power to directly impose pay cuts at the banks, but it can ask the boards of lenders that are owned or part-owned by tax payers to implement the cuts.
There was controversy last year when the board of Irish Bank Resolution Corp (IBRC), led by Alan Dukes, was asked by Mr Noonan to seek a pay cut for its best paid staff, but opted not to look for the savings. That bank has since been put into liquidation.
Many of the remaining staff at the former IBRC will be affected by the new Croke Park terms now anyway, because the Government plans to transfer them to NAMA later this year.
Under the deal, anyone whose basic pay is more than €65,000 will be hit with a 5.5pc pay cut.
The plan has yet to be agreed by public sector unions.
If it is agreed, the cuts will be on a sliding scale. That means a 5.5pc cut for anyone paid between €65,000 and €80,000.
Earnings above €80,000 and up to €150,000 will lose 8pc on the higher portion of their salary, rising to 9pc for pay between €150,000 and €185,000, with a flat reduction of 10pc on all earnings over that level.
That would mean sharp reductions in pay for top earners at the banks, including those paid more than the notional €500,000 a year salary cap.
The Government is due to consider bankers' pay when a report by human resources specialists Mercer is considered by the Cabinet.
The report was completed last year and 'benchmarks' or reviews pay across the banks.
Last night, a spokesman for the Department of Finance said the Cabinet's review of the Mercer report is the next step on bank pay. He declined to comment on whether the Croke Park terms will form part of that discussion.
However, a source close to the situation said it was "logical" to speculate that the Croke Park terms will form part of the discussion.
The Government is most likely to face resistance at Bank of Ireland, if a decision is taken to extend the new Croke Park terms to the banks.
The State is a 15pc shareholder at the bank that employs 11,000 staff. It is therefore just one of a number of influential owners who have their own seats on the board.
AIB, which employs over 12,000 staff and Permanent TSB with 1,800 staff are almost entirely in state hands.