AIB has not asked the Government to lift the €500,000 annual cap on executive pay as it begins the search for a new chief executive following David Duffy's shock resignation on Monday.

This has emerged in an answer from the Minister for Finance Michael Noonan to a question from Fianna Fáil's finance spokesman Michael McGrath.

“This Government’s policy with respect to banking remuneration has been in place since mid-2011,” Mr Noonan said.

“In summary, remuneration is capped at €500,000 (excluding normal pension entitlements) and variable rate pay such as bonuses are not permitted. AIB has not requested a review of the salary cap or bonus restrictions.”

A Government-imposed salary cap has been in place at AIB, which is 99.8 per cent owned by the State, since 2009.

At the World Economic Forum in Davos, the Taoiseach Enda Kenny ruled out a change to the cap.

"The Government will always act in the interest of the Irish taxpayer," he said. "David Duffy did a first class job on the salary scale he was given. There were a number of objectives he had to achieve and he's achieved those and the Government has absolutely no intention of changing the capping level."

Mr Noonan also told Mr McGrath that he expected a new chief executive to be in place at AIB by the end of June.

Mr Duffy is leaving AIB to take up a role in the UK as head of Clydesdale Bank, where he is expected to receive significantly higher remuneration.

Banking inquiry

Speaking in Davos, Mr Kenny also said that he had spoken to former European Central Bank president Jean-Claude Trichet “at some length” about his possible appearance at the banking inquiry.

“We had a very good conversation and I was surprised at his willingness to provide information and evidence to the Irish people.”

The Taoiseach said he had now passed on the matter to Ciarán Lynch, the chairman of the banking inquiry.