Minister of State with responsibility for financial services Michael D'Arcy has insisted a banking pay cap should remain in force in spite of mounting pressure from lenders who want the policy scrapped after blaming it for the loss of top staff.
The Department of Finance has been considering expert advice on whether to waive the €500,000 pay cap at State-supported banks, including AIB and Bank of Ireland, the Republic's two largest lenders.
Banks say the pay curb has led to high-profile defections, most recently Andrew Keating, the chief financial officer of Bank of Ireland, who bowed out in late June.
“The senior executives are on very large salaries and, as long as the State owns [their banks], I’m satisfied the pay caps are appropriate,” Mr D’Arcy told the Financial Times in an interview in New York, describing bankers’ pay as “the very very top percentile of salaries in Ireland”.
“We have come through a pretty difficult decade. Banking bonuses, as you know, prior to the previous collapse, they were not a helpful factor,” he added.
Mr D'Arcy also ruled out any further sale of the Government's stakes in AIB and Bank of Ireland before Brexit.
The State owns 71 per cent of AIB and 14 per cent of Bank of Ireland, a legacy of a crisis-era bailout that saved Ireland’s two biggest lenders from collapse. The State sold €3 billion worth of shares in AIB when the bank was relisted in 2015.
Sell-downs
Asked about plans for further sell-downs, Mr D’Arcy said: “It’s not going to happen before Brexit, so therefore you have to go after Brexit. We don’t know what’s coming in the next six months with Brexit. We don’t know what potentially is going to happen in terms of the impact that Brexit will have on the Irish economy.”
He said it was still to be decided whether to focus on selling AIB shares first or to offload the residual stake in Bank of Ireland. “We will see where the market is, how the stock is performing,” he added.
The Minister was in New York to launch Ireland’s international financial services strategy, which aims to add 5,000 financial services jobs between 2020 and 2025. Mr D’Arcy said job creation would be slower than in the previous five years because of technology.
“We will lose jobs. We want to redeploy them [the people who lose jobs] back into the sector,” he said. “You can’t pretend that that technology isn’t there, you can’t put that genie back in the bottle.” – Copyright The Financial Times Limited 2019
