Thursday 24 January 2019

No pay hikes for bankers 'til they refund bailout cash

€64bn swallowed by the banks would go a long way to alleviate the suffering visited on working people. (stock photo)
€64bn swallowed by the banks would go a long way to alleviate the suffering visited on working people. (stock photo)
Editorial

Editorial

There are many myths about banks, one of which is that they are there to create money for the public good. They clearly are not; their purpose is to make a profit.

But like any other business, they are owned by shareholders. In the case of AIB, the country owns 71pc of it as taxpayers forked out €21bn to bail it out after the crash.

Therefore, to hear AIB chairman Richard Pym describing the departure of chief executive Bernard Byrne as "a very grim day in my life" was surprising.

The markets reacted immediately and badly to the announcement of Mr Byrne's departure. Shares in AIB plunged more than 10pc yesterday morning - temporarily wiping approximately €1bn off the value of the bank.

Mr Pym's comments will put the squeeze on the Government to rethink the cap it has on bankers' pay - something he has long advocated, as is his right. However, in jittery markets all remarks must be weighed cautiously.

There was an element of panic to the early AIB share price falls yesterday, before later in the day cooler heads prevailed and the price recovered significantly.

The AIB chairman should reflect on whether his choice of emotive language to announce the CEO's exit played any role in what now looks like an oversell of stock.

Meanwhile, the AIB chairman's case for higher pay for top-tier employees jars for many reasons.

Last week, Mr Pym was lamenting the fact that pay controls had turned AIB into a "training ground" for bankers who then move to higher-paid roles with competitors.

Top bankers may or may not have the minister's ear but, in either case, if they are in any doubt: Only when the last cent of the last billion sunk into AIB is paid back with interest to the Irish taxpayer should such calls for raises be given credence.

You won't find much lustre attached to too many names of bankers in history, yet their pay-scales can still dazzle.

Finance Minister Paschal Donohoe must under no circumstances cave in to pressure to lift these pay limits.

A sizeable proportion of the population has not recovered from the crash. Hundreds of thousands more left and will not be returning in the immediate future because of legacy issues from the harm done to the economy.

The housing shortage, health crisis and funding fall-offs in vital services are all directly linked to the cost of the banking collapse. The €64bn swallowed by the banks would go a long way to alleviate the suffering visited on the working people of the country.

Many firms are still recovering and are not in a position to entertain pay hikes; special pleading by those who run our financial institutions is unlikely to illicit much sympathy.

Given the febrile political climate and the possibility of an election in the air, he should consider this very carefully.

Banks may be too big to fail, or even be held accountable; governments, at least, are not.

Irish Independent

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