The pay cap of €500,00 for the top bosses at AIB and Permanent TSB, in which the Government owns large stakes, is likely to be retained but other incentives for more junior executives are on the cards.
It comes after the political second-in-command at the Department of Finance, Michael D’Arcy indicated to the Financial Times in an interview at a banking conference in New York that the cap would likely stay in place.
“The senior executives are on very large salaries and as long as the State owns. I’m satisfied the pay caps are appropriate.
"We have come through a pretty difficult decade — banking bonuses, as you know prior to the previous collapse, they were not a helpful factor,” he said in the interview.
The Irish banks have long argued that the pay cap which was introduced during the €64bn bailout by taxpayers of the banks should now be lifted because they say they cannot hold on to senior staff as some international banks relocate operations to Ireland to prepare for the UK’s planned departure from the EU.
Finance Minister Paschal Donohoe
In 2018, Finance Minister Paschal Donohoe used his near-71% voting stake in AIB to veto an incentive plan for staff proposed by the lender’s then bosses.
He later commissioned and took delivery of a report from a consultancy on bankers’ pay at international peers.
The report by Korn Ferry has yet to be published.
Analysts say there is no great surprise that in a potential election year that the Government would not sanction lifting of the pay cap.
However, other incentives may yet get the green light for less senior staff.
