A Department of Finance banking report recommendation last month, adopted by then minister for finance Paschal Donohoe, that a €500,000 executive pay cap be removed at Bank of Ireland after it returned to private hands, wasn’t as clear cut as it seemed.
Documents released to The Irish Times this week show there was a lot of hand-wringing among officials before they landed on the proposal – with good reason, as they knew Opposition politicians wouldn’t waste time decrying “fat cat bankers” as households grapple with a cost-of-living crisis.
In the end, the review team decided to make the call on BoI pay. It recommended a return of bonuses of up to €20,000 and certain benefits across the State’s three surviving bailed-out banks, also including AIB and Permanent TSB (PTSB). The proposals, unpopular as they are with many, were brought by Donohoe to Cabinet colleagues – even though he could easily have left them for Michael McGrath, with whom he swapped jobs last weekend, to deal with.
The department’s final report was vague enough on when €500,000 pay caps across AIB and PTSB should also be done away with – proposing merely that they should occur when State shareholdings in each fall to an unspecified “appropriate level”. The State continues to own 57 per cent of AIB and 62.4 per cent of PTSB.
Donohoe declined, when pressed by reporters last month, to say what an “appropriate level” would be – saying it would be up to his successor to decide that.
However, we now know what his officials thought. Draft versions of the banking review report circulated last month, and shared under our freedom of information request, show that the review team was planning to recommend that the Minister for Finance no longer have a say on banker salaries when he is “no longer majority shareholder”.
McGrath is widely expected next year to continue Donohoe’s drip-feeding of AIB shares on to the market in 2022. This will probably see the State’s holding falling below 50 per cent in the first half-year – triggering a likely call from his officials to do away with pay caps at the bank, even if it is far from fully repaying its €20.8 billion rescue bill.
