More bank reform before pay cap lift
The resignation of the Allied Irish Bank chief executive, following the recent departure of the bank's chief financial officer, has given rise to a suggestion that the imposed cap on bankers' pay should be lifted. The suggestion is premature. Finance Minister Paschal Donohoe recently announced that his department has issued a tender for a consultancy firm to review bankers' salaries. The outcome, of what is expected to be a lengthy process, should be awaited and then duly considered before a decision is taken.
The Government was obliged to take stakes in AIB, Bank of Ireland and Permanent TSB following the banking crash 10 years ago. Since then top executives' pay has been capped at €500,000 for those in senior positions in AIB and PTSB. While this is admittedly below some international standards, it is still a considerable sum. Further reform of the banks is required, however, before a decision can be taken to lift the pay cap. Central to this reform is the issue of the continuing behaviour and culture in most banks and whether laws should be introduced to make the mismanagement of financial institutions a criminal offence.
By any standard, the mismanagement of Ireland's banks was outrageous, but the repercussions for individual bankers have been relatively scant. Some have departed with comfortable pensions, and others have also moved on to work abroad or elsewhere in the financial sector. But of all of the players in the country's economic and banking crash - banks, regulators, politicians and civil servants and, indeed, the public - it is bankers, top and middle management, which have escaped relatively scot-free.