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Banking on monkeys

Those with long memories will need little reminding that during the Celtic Tiger economic boom, positively obscene pay rates for company bosses, particularly bank chief executives, were justified on the grounds that if companies paid peanuts they would get monkeys.

This led to former Anglo Irish boss David Drumm being paid €3.27m in 2007, a year in which we now know the bank was rapidly going bust. His counterpart at AIB, Eugene Sheehy, was paid €2.1m the same year. With these two institutions having swallowed almost €50bn of taxpayers' money between them, one would be justified in wondering how, after paying a heck of a lot more than peanuts, we still ended up with monkeys?

Given the previous excesses it is hardly surprising that the Government imposed salary caps of €500,000 a year for the bosses of both AIB and Bank of Ireland when it was forced to unconditionally guarantee the deposits and bonds of the Irish banks in September 2008.

Now the banks, in what looks suspiciously like a rehash of the old peanuts and monkeys argument, are claiming that the salary cap is making it impossible for them to attract top-class outside talent.

With AIB currently seeking to recruit a new chief executive this is rapidly becoming a pressing issue.

If AIB needs to breach the salary cap to attract the right candidate, then the Government must ensure that any pay in excess of €500,000 is in the form of bonuses tied to verifiable, long-term targets. Otherwise the banks will once again appoint over-promoted monkeys at the taxpayers' expense.