“It’s outrageous during cost of living crisis” – People aren’t happy that banks can give €20,000 bonuses again – TheLiberal.ie – Our News, Your Views

“It’s outrageous during cost of living crisis” – People aren’t happy that banks can give €20,000 bonuses again

People are outraged with the government giving the go ahead to be big banking bonuses yet again.

Cabinet approved plans to ease pay restrictions and bonuses for bank staff who were bailed out by Irish taxpayers during the financial crisis.

The proposals were presented to the cabinet this morning by Finance Minister Paschal Donohoe.

As a result, banks will be able to pay bonuses of up to €20,000 to their employees.

Restrictions on unpaid benefits such as private health insurance and child care will also be removed.

The current €500,000 salary cap will be removed entirely from the Bank of Ireland, which is no longer partly owned by the state.

While the other bailed-out banks in which the state still has a majority stake, AIB and Permanente TSB, will see their caps increased when the state’s stake is reduced to an appropriate specified level in the future.

Pay restrictions were placed on banks in the wake of the financial crisis more than a decade ago, following what happened subsequently on the actions and practices of senior bankers across the industry.

However, affected banks have lobbied in recent years for them to be relaxed or removed.

They said it was putting them at a competitive disadvantage against competitors within the industry and other companies outside of it competing for similar talent.

Speaking at a press conference, the Finance Minister said there was really tough competition for workers in Ireland’s national banks and in the international financial services sector who are based here.

“Meanwhile the restrictions that are currently in place are causing challenges for staff recruitment and retention, especially in the critical areas of risk, of IT, of cybersecurity, of compliance and key legal areas,” Mr Donohoe said, reports RTE.

He said it is therefore appropriate for the bank review to consider the matter and concluded that the restrictions be changed.

With the state no longer a shareholder in the Bank of Ireland, Donohoe said it is no longer appropriate for the state to determine the pay of anyone who works there.

He said that he fully understood the sensitivity of the recommendation that led the government today to ease the restrictions.

“And I understand that for many that have been effected in such a negative way by the events that have taken place in our banks over many years, that this recommendation and decision to allow variable play up to €20,000 will be a cause of concern,” he said, reports RTE.

But he said the liability he had to deal with was that the three banks involved have 20,000 employees and handle deposits worth 220 billion euros, and good people are needed at those banks.

The Minister did not define what would be the “appropriate level” of state AIBs and permanent TSBs to justify removing salary caps from these institutions.

He said it would be up to the government to decide in the future when the time was right for further share sales.

Mr Donohoe said he would not anticipate subsequent changes to the government’s share of other bankers pay, including the 89% supertax on bank bonuses that remains in place but said he did not believe it should be reviewed.

The Financial Services Union (FSU) said the lifting of restrictions on variable pay and benefits of up to €20,000 would benefit ordinary bank staff.

Speaking to RTÉ’s Morning Ireland, O’Connell said the bank’s washing machines “now dealing with the biggest logistical change in banking, which is the departure of two banks. 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 be rewarded sufficiently,” reports RTE.

Mr O’Connell said now was the time for the bank to show that I was switching and negotiating with an equal rewards structure for staff.

Reports RTE, he said the change is not about banks “deserving more, it’s about staff being shared in the benefits of the banks and the performance of the bank. Currently dividends are paid, share buy-backs are given to shareholders and staff and customers, by the way, should benefit from this report.”

He said none of the union members “were involved in anything untoward in banking, just working diligently on behalf of the public, doing their jobs, and were victims as much as anybody else,” reports RTE.

On revoking the salary cap, he said it was a matter for the minister to do.

He said his members “have been extremely patient, the last group of workers in the state to have pay restrictions unwound. So, our interested is in sitting down and negotiating with the banks a fair reward system for those members,” reports RTE.

Under the current restriction, salaries are capped at €500,000 all year round, and former Bank of Ireland chief executives enjoyed an exemption which allowed them to earn nearly €1 million.

Bonuses are also not allowed, and a special super tax rate of 89% on such payments is also introduced in 2011 after it emerged that some executives were still receiving performance-related contractual bonuses.

But across Europe there has been an increase in such measures with retaliation from the banking sector.

All in all, the plans are likely to have proved politically sensitive given the focus on the rising cost of living.

The move came shortly after when Finance Minister Paschal Donohoe lost his position to replace Fianna Fáil’s Michael McGrath as part of the transition towards the end of government.

The note was received today by the Council of Ministers as part of the completeness of the banking review desired by the Finance Minister.

Irish Banking Payments Federation Chief Executive Brian Hayes has welcomed plans to allow restriction of his pay and bonuses for personal banking.

Banks are public companies and that’s a factor that needs to be considered, he added.

“Every public limited company that I know has fixed and variable pay components in terms of key deliverables for staff who work across that sector,” reports RTE.

Mr Doherty said bank clerks often start out on low wages.

There is scope to ensure workers are adequately paid, he said.

But, he added, it’s not about those workers but about older workers.

Mr Doherty said now is not the time to reintroduce bank bonuses, but that there are other initiatives, such as childcare, that can help and wash.

Pearse Doherty said management positions at AIB are held by the state, despite the salary level, and the decision to remove this cap “makes no sense”.

He told Morning Ireland that it’s crucial that culture never changes and said it’s not accidental.

“So in a situation where we see the largest ever fine issued to Bank of Ireland for the pain and suffering that it caused, not something that happened a decade ago, what happened just up to ten months ago, then I would not be saying to that bank – by the way, now you can pay your senior executive whatever you want. That is not acceptable,” Mr Doherty said, reports RTE.

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