BANKING SECTOR:EXCESSIVE RESTRICTIONS on pay levels were creating problems in recruiting fresh talent to reinvigorate the banking sector, Financial Regulator Matthew Elderfield has said.
Speaking to reporters at the MacGill Summer School, Mr Elderfield said EU procedures in this regard provided a good framework for a less restrictive pay policy.
“Irish taxpayers are probably going to own all the banks and in order to refresh and bring in some fresh talent I think it is going to be important to bring in some outsiders to the management.
“If we own the banks we want to get our best value out of them. Not having any barriers to that is going to be important, so looking at the remuneration structures for the banks is going to be important.”
Asked what level he would like to see the salary cap for bankers increased to, he replied: “I don’t have a view on that.” There were EU standards in place and this was “a good starting point”.
These included provision for a “clawback” where a banker could have to reimburse a bonus for work which later turned out to be problematic.
He added: “If you want to bring in some outside talent, to freshen up the bank boards and the management teams, it is better to have a bit of arm’s length between the political system and the banking system and look at the remuneration arrangements in the round.”
Asked about reports of a new investment in the Bank of Ireland, Mr Elderfield said: “That’s very encouraging, very welcome, on a number of fronts.”
It meant less cost to the taxpayer; showed that one of the two key pillar banks was not going to have to be controlled by the State; and showed private investors had taken a “good hard look” at the risks in the Irish banking system and might be willing to invest themselves.
In an address earlier he said he recognised the “stress and anxiety” that mortgage arrears, or even the imminent threat of mortgage arrears, were having on the lives of many people.
The Mortgage Arrears Resolution Process was “aimed at ensuring a more consistent and transparent approach by lenders when dealing with arrears cases”.
Kevin Gardiner of Barclays Wealth defended the decision by the then government to bring in the blanket bank guarantee.
“I think the Irish government at the time was right to issue that blanket deposit guarantee.
“Sometimes decisive speedy action is better than a more considered but late response: a disorderly run on bank deposits is the stuff of which anarchy is made.”
He added: “It looks as if the euro area authorities will continue to do their bit to prevent the Irish banking system from imploding further. “And those authorities will be around to make that happen: I think last week’s summit was a very clear demonstration of commitment in that respect.
“We are witnessing surely not the beginning of the end for the single currency, but the end of the beginning – the missing fiscal infrastructure is now very, very slowly being put in place.”
Minister of State for Finance Brian Hayes opposed any easing of the €500,000 salary cap for bankers: “Our banking system is still in the AE ward, we’re not in normal territory.” Any return to the old payment system would be “simply anathema to the Government”, he told reporters.
