The result of the general election might have created uncertainty about who will form the next government but it has almost certainly ensured that the €500,000 cap on bankers’ pay and the prohibitively high level of taxation on their bonuses will remain in place.
The limits imposed by the government post the crash apply to AIB, Bank of Ireland and Permanent TSB, all of which were bailed out by taxpayers and still have the State as a major investor.
Sinn Féin was the big winner of the general election and its manifesto lays out the party’s position in clear terms.
“Keeping the salary cap and ban on bankers’ bonuses in place, ensuring that those banks bailed out by the taxpayer do not return to the excessive pay and reckless culture of the past.”
The manifesto also says it will “keep the State’s 71 per cent ownership of AIB, ensuring that the State remains an important player in the banking sector and that decisions made at board level are made in the interest of mortgage holders, borrowers and customers”.
That must send a shiver up the spine of AIB chief executive Colin Hunt.
While there is no guarantee that Sinn Fein will form part of the next government and, even it is does, it will have to compromise on certain issues with its coalition partners, a move on the pay cap is unlikely to form part of a programme for government.
Minister for Finance Paschal Donohoe had commissioned Korn Ferry to review the issue and to make recommendations. We can only assume Korn Ferry suggested at least some movement on pay and bonuses – it would be strange if it had done otherwise.
The report was handed to the department last year and to the Minister in the final quarter of 2019. With an election just around the corner, Donohoe wisely chose to do nothing at that time, rather than provoke a political storm.
The election result means that this expensive piece of advice will now probably never see the light of day.
