Léim ar aghaidh chuig an bpríomhábhar

Banking Sector Remuneration

Dáil Éireann Debate, Thursday - 25 October 2018

Thursday, 25 October 2018

Ceisteanna (18)

Pearse Doherty


18. Deputy Pearse Doherty asked the Minister for Finance when the report he commissioned on bankers’ pay will be completed and published; and if he will make a statement on the matter. [44221/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

Deputies will be aware that Government policy on banking remuneration has remained unchanged since the financial crisis. Extensive restrictions are in place and from the outset let us be clear these are not simply confined to a handful of senior bankers whose pay is restricted by the €500,000 pay cap (excluding a standard pension contribution). These affect c.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.

A new regulatory framework has been put in place since the financial crisis across the EU, the economy has returned to near full employment, the remaining banks are profitable again – and in the case of AIB and BOI sustainably so. The State remains the largest shareholder in AIB, BOI & PTSB but following the successful IPO of AIB in June 2017 all three banks are also now on an equal footing with listings on the main market of the Irish and London stock exchanges.

The skill set required in the banking sector is evolving with the greatest demand for staff now in areas such as the digital economy, risk management, legal and compliance. These skills are in demand right across the economy and so the banks are competing for this talent against companies who have more flexible and attractive remuneration structures. Brexit has only made this problem more acute.

In the senior ranks of the banks the substantial disparity in pay levels versus other Irish listed companies or peer banks in Europe is stark and introduces an obvious retention risk particularly in AIB and Bank of Ireland. I also need to be advised if this retention risk and a lack of alignment between the interests of executives and shareholders, undermines the Government's objective of recovering the State’s full investment in the banks.

My department held a full open EU public procurement to select a suitably qualified external consultant to assist the Department of Finance in completing this review of Government policy. On 3 October the specialist advisory division of International Firm Korn Ferry were appointed.

My officials have met with Korn Ferry and already begun a consultation process with the banks, the Financial Services Union as well as a range of investors. I expect the Department to complete the Review before the end of the year and the review itself will be published in Q1 2019.

It is important that we do not prejudge the outcome of the review, It is also important to note irrespective of the outcome of this review, and what advice is given on the reintroduction of variable pay or bonuses, the ‘super tax’, which sees 89% of bonuses being paid back to the State will remain in place via the Finance Act 2011. The power to alter that remains exclusively in the hands of the Oireachtas.