THE INCOMING head of financial supervision at the Central Bank has agreed to take a 15 per cent pay cut on his €400,000 salary, following last week’s public-sector pay cuts.

Matthew Elderfield, who is currently head of financial regulation in Bermuda, will be paid an annual salary of €340,000 when he takes up his new post on January 4th.

Central Bank governor Dr Patrick Honohan said Mr Elderfield would receive €75,000 for work carried out before his start date next month. He had also agreed to pay Mr Elderfield a €100,000 bonus if he reached “specific goals” after three years.

Despite the large remuneration package, the governor said Mr Elderfield was “still taking a substantial pay cut”, amounting to a 48.6 per cent reduction in his take-home pay from his current salary.

He said Mr Elderfield received an annual pay package of $730,000 (€502,000) in his current role, where he paid little tax.

Labour TD Seán Sherlock questioned the high salary being paid to the incoming regulator.

Dr Honohan said Mr Elderfield’s skills “were in very strong demand” around the world and this was the “most cost-effective way to get the job done”. He would prefer if bankers were paid less but “we are caught in a world”. He added that he was against bonuses being paid on short-term targets.

The governor said the Central Bank board had agreed to apply the same public-sector pay cuts introduced in last week’s Budget to staff in the organisation.

In an internal e-mail to staff, Dr Honohan said it would “be unthinkable not to follow suit”.

Responding to a query from the committee on negative equity, Dr Honohan said this was “a tragedy” but measures to help struggling homeowners lay with policymakers as any support provided would ultimately affect the banks.

On the regulation of international firms, Dr Honohan warned that he had to ensure there were “no new unexploded bombs coming into our system”.