Friday 23 February 2018

Noonan rules out bankers’ pay rise above €500k cap

Donal O'Donovan and Laura Noonan

Finance Minister Michael Noonan last night slapped down calls from the Financial Regulator and senior bankers to scrap a cap on salaries for executives at rescued banks.

Mr Noonan dismissed calls to lift salaries for executives at rescued banks to more than €500,000.

Financial Regulator Matthew Elderfield said the Government should consider the pay issue in an effort to attract new executives to Irish banks.

Mr Elderfield said the restrictions on pay were creating problems in recruiting talented executives.

But Mr Noonan rebuffed the call. "Matthew Elderfield is independent and he is entitled to his view, but I don't agree with that view," the minister said.

AIB chief David Hodgkinson backed calls to raise pay for bankers. "You're not going to get the full slate of candidates you'd wish to have," he said.

Mr Noonan also said Ireland was set for another cut in the cost of the government bailout when the IMF dropped the interest it was charging for rescue loans.

The minister was speaking at the Oireachtas finance committee, which was held in the Dail Chamber to allow as many TDs as possible to attend.

Normally, committees are held in smaller meeting rooms in the basement of Leinster House.

Mr Noonan told the committee he expected the 5.7pc interest rate charged by the IMF for €22.5bn it is lending to Ireland under the bailout to be cut by 1pc from as early as September 2012.

Cutting the rate charged by the IMF to 4.7pc will mean a fall of €225m per year in interest payments -- or €1.7bn over the 7.5 year term of the loans.

It comes after last week's deal to reduce the interest rate charged for bailout loans from the eurozone group of countries by 2pc.

The cut in the rate charged by the IMF was not sought by Ireland, it was arrived at by the IMF itself during a routine revision of its assessment of the appropriate terms that it applies to all countries.


The IMF rate cut still has to be agreed by a two-thirds vote of the IMF's member countries. Despite a degree of uncertainty that the change will be passes the minister clearly believes it will be carried.

Last night, a spokesman for the Department of Finance said it would be unusual for such an IMF initiative not to be carried by members, though he warned the approval process could be slow moving.

The minister came under pressure from Independent TDs and Sinn Fein finance spokesman Pearse Doherty to use the likely default in Greece as an opportunity to impose losses on senior lender to Irish banks.

Mr Noonan ruled out any action against lenders to the "pillar banks", including AIB and Bank of Ireland. He said he would seek losses on lenders to Anglo Irish Bank and Irish Nationwide through discussions with the European Central Bank in the autumn.

Irish Independent

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