Bankers' bonuses should only be considered once public confidence in banks has been restored, the Financial Services Union (FSU) has said. And it argues that ordinary staff should be rewarded ahead of high-flying executives.
The bank officials ' union has expressed serious reservations about a possible removal of restrictions on pay levels and bonuses, with acting secretary general Gareth Murphy saying an ongoing review on remuneration levels at Irish banks should look beyond bonuses.
Pressure on the Government to remove restrictions on salaries and bonuses has increased in recent days though after AIB chief executive Bernard Byrne announced he is leaving the bank to take a job with stockbroker Davy. Mr Byrne's announcement came just months after chief financial officer, Mark Bourke, said he was leaving AIB to head up the finance function at Portuguese lender Novo Banco.
Minister for Finance Paschal Donohoe last month hired Korn Ferry, one of the world's largest headhunting firms, to assess remuneration across bailed-out lenders, which is expected to recommend a return of bonuses.
Restrictions
“We have made very clear that any lifting of restrictions should start with ordinary level staff across the sector and not with executives,” said Mr Murphy. “It would not be right to lift the executive pay cap or consider bonus/share arrangements for the top brass when significant pay and remuneration issues exist for more junior staff across the sector.”
Currently, any bonus plan involving a bailed-out Irish bank is subject to an effective tax rate of 89 per cent, effectively outlawing them. Salary levels in the banking sector are capped at €500,000.
The FSU, which recently met officials from the Department of Finance, said it wants to ensure that the review goes beyond bonuses to also address issues such as childcare and healthcare allowances, which it said "could help contribute to decent work and conditions for all staff".
Salary cap
Separately, Labour's finance spokeswoman Joan Burton has also called for the bankers salary cap to remain in place, saying €500,000 is more than enough pay for senior executives.
“As we saw before the crash, lavish pay is no guarantee of executive success,” said Ms Burton. She called on Mr Donohoe to “continue to hold his nerve” and ignore calls for changes to remuneration levels.
“He must hear loud and clear that it is unacceptable for State-owned banks to start paying out bonuses and paying salaries of more than half a million while we are in the middle of a housing crisis brought on by the actions of banks,” she said.
The Department of Finance’s review is expected to be completed before the end of the year.
