Dáil Éireann Debate, Tuesday - 8 December 2020
199. Deputy Ged Nash asked the Minister for Finance if a commitment will be given to retaining the effective ban on bank bonuses for the lifetime of the Government in view of the current Covid-19 crisis; and if he will make a statement on the matter. [42030/20]
View answerThe Deputy will be aware that Government policy on banking remuneration has remained unchanged since the financial crisis. Extensive restrictions are in place and these are not simply confined to a small number of senior bankers whose pay is restricted by the €500,000 pay cap. These affect circa 23,000 workers across the three banks in which the State has a shareholding. The policy dictates that variable pay including bonuses and any other fringe benefits including the likes of health insurance and childcare cannot be paid to any staff members from the most junior lowest paid staff to the most senior ranks.
As a result the previous Government undertook to carry out a review of Government bank remuneration policy to determine if it remained fit for purpose. My department worked with the specialist advisory division of Korn Ferry to undertake this review. Stakeholders engaged with included the major institutional investors in the banks, proxy advisory firms, the Financial Services Union (FSU), the chairs of the remuneration committee in each of the banks, the Central Bank of Ireland and representatives of the Single Supervisory Mechanism (SSM) in Frankfurt.
As I have indicated previously I have read the report. It is a complex and far ranging piece of work and it has most certainly informed my thinking on the issue.
I acknowledge that there is a very different European regulatory environment in place now which will help prevent the return to some of the excesses of the boom years including the EU Capital Requirements Directive (CRD IV) and the Remuneration Guidelines of the European Banking Authority.
Furthermore the powers of the Central Bank were significantly enhanced by the Central Bank (Supervision and Enforcement) Act 2013, particularly powers to take action against wrongdoing by financial services providers and to strengthen the ability of the Central Bank to take action against individuals.
However I believe the issue of bank remuneration is inextricably linked to further restoring public confidence in the culture and accountability of our banks and the forthcoming SEAR regime and the Central Bank (Amendment) Bill more generally, will provide an effective framework and will help to reassure the public that meaningful cultural change is underway in the banking sector.
