A salary cap of €500,000 at AIB and PTSB is set to be removed, according to Minister for Finance Paschal Donohoe, reports Breaking News.
The announcement followed the Government’s sale of its remaining 2 per cent shareholding in AIB on Monday. Mr Donohoe said it was no longer suitable to impose salary restrictions on a bank the State no longer owns.
He also confirmed that the pay limit for PTSB, where the State still owns a 57.4 per cent stake, would be lifted, reports Breaking News.
He noted that since the financial crisis, several reforms have been implemented to improve regulation within the banking sector.
He said these regulatory measures are now a more effective way to oversee the banks than continuing with salary caps, reports Breaking News.
“This pay cap will now be removed for both of those banks,” Mr Donohoe said, reports Breaking News.
“The skillset required in the banking sector is evolving, and in some cases the greatest demand for staff can be in areas such as IT, cyber, risk management, legal areas and compliance decisions,” reports Breaking News.
Mr Donohoe stated that lifting the cap was necessary to help banks stay competitive in hiring talent.
“These skills are in demand right now across the economy, and so the banks are competing for this talent against other companies who are more flexible and have different remuneration policies,” reports Breaking News.
He was asked whether the public might react negatively to increased banker salaries while interest repayment costs remain high.
“Of course, I understand that any decision like this with regard to bank pay is one that will always be viewed critically by people who are both critical of our banks, but also remember all of the cost and difficulty that I was at pains to acknowledge in my statement,” reports Breaking News.
“What I would say to those, and there are many who continue to be concerned, is firstly that I don’t believe that it is correct that we set pay in a company that we no longer have any share in, that as a small, open economy we’re trying to attract investment into our economy, and I would hope that banks like AIB and Bank of Ireland will continue to be able to attract investment in their future. For that reason, us playing a role in setting their pay when we no longer own a single share in those companies is not appropriate,” reports Breaking News.
“Again, I can understand the sensitivity of a decision like this for so many, but the changes that we have made and how our banks are supervised are really considerable,” reports Breaking News.
He said the Government would continue to assess options concerning the State’s future stake in PTSB.
“I did decide there was a fundamental difference between a bank of the scale of PTSB operating in an environment in which one bank is removed from the pay framework, as opposed to where both other banks that it competes against are removed from it,” reports Breaking News.
“The fact that we were moving to an environment where both of the pillar banks that they would compete against, in every sense, would be out of the framework, I decided it was a very important factor versus where they were in the past with only one,” reports Breaking News.
He described this decision as an “important moment” in Ireland’s economic development and said it reflects a message that the country supports a competitive banking environment.
During the financial crisis, the Irish government invested €29.4 billion in AIB, Bank of Ireland, and PTSB between 2009 and 2011, reports Breaking News.
At the time of AIB’s initial share sale in 2017, the State owned 99.8 per cent of the bank.
So far, the government has recovered over €29 billion from its investments in two of the three banks.
The final State-held shares in Bank of Ireland were sold in September 2022, reports Breaking News.
Tell us your thoughts in the Facebook post and share this with your friends.
