BANK of Ireland CEO Richie Boucher's €13,629 weekly salary looks set to remain intact despite a call from the Taoiseach last week for senior bankers to make a "substantial contribution" to reducing the cost of their pay and pensions, the Sunday Independent has learnt.
Asked for a comment on Mr Kenny's remarks to the Dail last Wednesday, a well-placed source at the bank in which the State is a 15 per cent shareholder said: "The remarks from the Taoiseach came as something of a surprise and we're not sure how intentional they were. It certainly isn't something Richie and his team have given a lot of consideration to."
Further explaining the position of Mr Boucher – whose total pay and pensions package is €843,000 – the source described the protection of the BoI chief's core remuneration and that of his management team as a crucial factor in maintaining the confidence of the bank's numerous private shareholders, who include the hugely influential American investor Wilbur Ross among their number.
"There's one thing that the bank's private investors are concerned with and that's whether they still have the people they invested with initially running the bank. One of their concerns despite the views of some people is that the current management of the bank might not hang around if their pay was reduced."
Asked if Mr Boucher had given any consideration to reducing his salary in view of the huge political and public opprobrium it had attracted in the days before and after the BoI AGM last Wednesday, the source said: "Richie has been extremely busy over the last week. The private sector shareholders are watching very closely and Richie and the management team have a very big responsibility towards them. The private sector shareholders have made their feelings known on this on a number of occasions. They've seen their investment making progress and they wouldn't be overjoyed to see anything destabilise that."
But while the matter of Mr Boucher's €690,000 in basic pay doesn't appear to be down for discussion, he could yet face a diminution in the size of his pension along with every other employee of the bank as part of an effort to tackle BoI's huge pension fund deficit of €1.2bn.
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On this, the source said: "We are looking at our pensions. We have pension issues and we're looking at that, so obviously Richie would be affected by whatever outcome there is in that regard."
While Mr Kenny's comments to the Dail last week that he expected there to be a "substantial contribution [by way of pay reductions] from the leadership of the banks" were widely interpreted as including Mr Boucher along with the chiefs of wholly-owned institutions such as AIB, yesterday Michael Noonan moved decisively to dispel any such notions.
Speaking to reporters on the margins of the Irish League of Credit Unions' AGM in Limerick, the finance minister addressed the controversy surrounding Mr Boucher's pay: "Richie Boucher's salary is a matter of legal contract and the arrangements were made before the Government came into power two years ago. We have a situation where we have only 15 per cent of the shares in Bank of Ireland whereas we have practically all of the shares in AIB, so the Government's relationship with the Bank of Ireland is different from its relationship with AIB and Permanent TSB. The main driver in Bank of Ireland is the private investors from the US and Canada."
On the matter of the costs being incurred by the wider banking sector, Mr Noonan said he had written to all the banks and asked them to reduce their respective cost bases by up to 10 per cent. He said he expects to hear responses by Tuesday. "We did a review of bankers' pay. I have written to the main banks and asked them to take between six and 10 per cent out of their cost base. The reason for that is they are loss making and there is so much taxpayers' money in there that needs to be protected," he said.
"It will differ from bank to bank, so that their cost base is reduced and we have proper banks that will return to profitability and repay the taxpayer in due course. The bottom line is the taxpayer has put an awful lot of money in and that money wasn't put in to be burned up. It is a reduction in payroll costs and I hope to hear from all the banks by the end of April.
"It would be ridiculous to be asking the nurses, teachers and guards to take pay cuts and the bankers, who are losing money all the time, could actually have got pay increases since the crisis started. That has to be sorted out," Mr Noonan said.