Ireland set to loosen bankers’ pay rules imposed after financial crisis


The Irish government plans to loosen the strict caps on bankers’ pay and bonuses imposed after the financial crisis, as it dismantles a regime that lenders say has hurt their ability to attract and retain staff.

Finance minister Paschal Donohoe will put the proposals to the cabinet at a meeting later on Tuesday. The proposals came after a review of the retail banking sector that the government was forced to rescue during the financial crisis.

Under the proposals, banks will be allowed to pay bonuses of up to €20,000 as well as other benefits such as health insurance — which until now have been banned — according to a person familiar with the matter.

In addition to the bonus payments, Bank of Ireland, which was the first of the banks to return fully to private ownership this year, is expected to be allowed to lift a €500,000 cap on executive pay.

AIB and Permanent TSB, rival lenders that are still majority state-owned following their rescue, will be allowed to abandon the pay cap once the state’s stake in them falls below a threshold to be set by the government. The state holds 57 per cent of AIB and 62.4 per cent of PTSB.

The ditching of the rules is expected to be a welcome development for Bank of Ireland, which has been lobbying against them, although its new chief executive, Myles O’Grady, secured an exemption that allows him to be paid nearly €1mn.

BoI and the other banks declined to comment until the cabinet had signed off on the measures.

Pearse Doherty, finance spokesman at Sinn Féin, which opinion polls suggest will lead the next government after elections due in early 2025, called the change “a kick in the teeth to struggling households”.

BoI was fined a record €100.5mn and AIB €96.7mn for refusing to give customers access to cheaper mortgages that tracked European Central Bank rates in an industry-wide scandal dating back almost two decades.

“[In] the year that has seen record fines issued to AIB and Bank of Ireland for their part in relation to the tracker mortgage scandal . . . that the parting gift of the minister for finance is to tell the senior executives in . . . all banks that there will be no pay cap restrictions into the future — I think it’s tone deaf to the scandal that we have seen,” Doherty told RTÉ Radio.

Donohoe is expected to become minister for public expenditure in a scheduled cabinet reshuffle on December 17.

John O’Connell, general secretary of the Financial Services Union, said Donohoe was right to act as the industry was undergoing a huge change with the departure of KBC and Ulster Bank from the country.

“So we think now is the time for the minister to act and to lift the restriction on the €20,000 payments to allow staff to be rewarded sufficiently,” he told RTÉ Radio.


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