Paschal Donohoe sets scene for return of bankers' bonuses of up to €20,000
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Finance Minister Paschal Donohoe is set to announce the start of the process to unwind the controls over bankers' pay and bonuses that were put in place after last financial crisis.
The Government had long signalled it would start to drop the conditions over bankers' pay when the State's major shareholdings in the banks fell, and a report into lenders will set scene for the lifting of the pay and incentive caps. Banks will now be able to pay bonuses of up to €20,000, according to the proposals.
Mr Donohoe announced the setting up of the Retail Banking Review over a year ago as it became clear the departure of Ulster Bank and KBC Bank would further reduce competition in Irish banking and boost the market shares of the already dominant lenders, AIB and Bank of Ireland.
Its terms of reference included examining competition, consumer protection, and consumer choice for households and small businesses.
The three bailed-out lenders that survived the banking crash, AIB, Bank of Ireland, and Permanent TSB, have long been subject to controls over their pay and bonuses, although Bank of Ireland has long paid its CEO significantly more than its rivals.
Expectations that Bank of Ireland would be freed from the controls had increased ever since the Government sold down its last remaining stake in the bank in recent months. Myles O’Grady, the former chief financial officer at the bank, has returned to take up the top job as chief executive, at the existing salary of €960,000.
Top pay at the other banks was set at the lower limit of €500,000, but the Government has also started to sell down the shareholdings, which now stand at 57% in the case of AIB and at over 63% for Permanent TSB.