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FINANCE MINISTER PASCHAL Donohoe has confirmed that bonuses for bankers of up to €20,000 can be reinstated and the pay cap of €500,000 lifted at Bank of Ireland.
AIB and Permanent TSB will follow suit as the State sells off more of its stake in those banks.
The move comes as the Department of Finance’s long-awaited retail banking review report is being brought to Cabinet by the minister today.
The issue was raised during Leaders’ Questions in the Dáil today, when Sinn Féin leader Mary Lou McDonald pressed Taoiseach on why he was allowing the finance minister to take “one last roll of the dice in favour of the very wealthy” by lifting the cap on bankers bonuses.
“Taoiseach why are you going along with this? How can you tell those who are struggling to heat their homes or put food on the table that half a million euros is not enough for bankers?” she said.
McDonald said that Donohoe’s “reward” for the top executives in the Irish banking system came despite the tracker mortgages scandal, and Irish banks being fined for “actions that led to families losing their homes.”
She argued that Fine Gael were seeking to once again catering to “self-serving banks.”
“We’ve seen where that has led us before,” said McDonald, citing the “economic crash and social catastrophe” that led to the last recession.
“For the banks it meant a €44 million rescue package,” she said.
“For workers and families it meant austerity and the most vicious cuts to services for the vulnerable,” she continued.
In reply Micheál Martin accused Sinn Féin of “kicking the teeth of the ordinary bank workers of this country.”
“John O’ Connell, the general secretary of the Financial Services Union, said the lifting of variable pay restrictions will benefit ordinary banking staff,” he said.
“Restrictions are causing issues in IT and in cyber security,” he said, stating that 40% to 45% of workers are leaving Irish banks and have indicated that restricted pay is the reason why.
The Taoiseach argued that the opposition leader was focusing on the pay of the “top brass” in the banks for “electoral reasons,” when the cap of half a million in pay only applied to “one employee in Bank of Ireland.”
McDonald doubled down and accused Martin of “hiding behind ordinary banking workers” while allowing Fine Gael to return to the “bad old days” of bankers earning “obscene bonuses.”
“I am sure your newfound concern for ordinary workers is welcome, but the banks are very profitable and they should pay their staff properly.”
Speaking to reporters today, Donohoe said the Government has yet to decide what level the Government shareholding in AIB and PTSB will need to reach before the salary cap is scrapped.
Earlier this year, the minister said he recognised that bankers’ pay is an issue of real public interest, however, he said there are “increasing views about the matter being articulated within the banking sector”.
The Irish State took stakes in AIB, Bank of Ireland and Permanent TSB during the banking crash over a decade ago, with the Government taking measures then to cap the pay of top executives at €500,000. It is now understood that the pay cap is set to be lifted gradually, subject to Cabinet approval today.
Over the years top executives of banks as well as some within the Central Bank have argued for pay caps to be lifted in order to help with retention of bank staff and to increase competition in the sector.
Donohoe said today that that AIB, BOI and PTSB are facing a serious staff retention issue due to the pay and bonus caps.
Last year, the Financial Services Union (FSU), which represents about 60% of the workforce in the bank, said the re-introduction of bonuses for senior bankers would be unpopular if it occurs before the Government’s new accountability regime for senior figures at regulated financial firms isn’t operational.
The Central Bank Accountability Bill is currently at Committee Stage in the Dáil.
It is understood the FSU has been calling for the lifting of restrictions on variable pay and benefits up to €20,000.
Reacting to the news, Social Democrats co-leader and finance spokesperson Róisín Shortall said the plans to restore bankers’ bonuses are “an insult to the millions of workers who have seen their wages fall because of the cost of living crisis”.
“As Finance Minister Paschal Donohoe prepares to leave office, his biggest priority is rewarding bankers and restoring their bonuses,” she said.
“Has the Minister forgotten that it was bankers reckless lending, for which they were richly rewarded with gold-plated bonuses, that led the country into bankruptcy and collapsed the housing industry during the financial crash?
“Bankers do not appear to have learned any lessons from that dark chapter in their history, given the revelations from the tracker mortgage scandal that have come to light in recent years.
John O’Connell, General Secretary of the Financial Services Union, recently told RTÉ that the FSU believes that there are no longer compelling grounds for restricting the ability of ordinary bank employees to avail of variable pay and benefits.
“Bank staff, like everyone else are struggling with the cost-of-living crisis,” O’Connell said.
The Banking & Payments Federation Ireland (BPFI) has today welcomed the pay cap removal and reinstating of bonuses.
Speaking today, Brian Hayes, Chief Executive, BPFI, said “BPFI and its member banks welcome the publication of today’s report which comes at a critical time for the sector. The report contains recommendations both for industry and Government to implement.”
“BPFI will work in a constructive way to implement these recommendations and will establish an industry-wide taskforce to take the report’s conclusions forward in the weeks and months ahead.”
Hayes said the loss of two significant retail banks recently has put a spotlight on the landscape and the environment for retail banking in Ireland.
“The future of the retail banking sector, which employs over 20,000 people, must be based on a sustainable and commercially viable proposition, both of which are consistently recognised in today’s report and are fundamental in banks serving the needs of their customers, the economy and Irish society,” he said.
Today’s decision is a move ”towards a normalisation of bank pay and conditions”, he added, stating that it recognises the challenges that retail Irish banks have in recruiting and retaining staff, especially for key roles.
The review was carried out due to the amount of change in the retail banking sector in Ireland, including the withdrawal of two banks.
Along with bankers’ pay, the review will look at the current retail banking landscape and likely market trends over the next decade. It will also deal with competition, consumer protection and consumer choice, as well as options for the mortgage market.
The review concludes that the trends seen over the last decade, such as the increasing digitalisation of the sector and the further decline in the use of cash, will continue and the issues arising from these trends, including fewer ATMs and reduced branch networks, are already issues that we see today.
Battery-electric train carriages
Separately, the Minister for Transport Eamon Ryan will look for approval from Cabinet for Iarnród Éireann to order 90 new battery-electric train carriages before Christmas this year.
The minister believes the new carriages will provide a major boost to Ireland’s rail transport capacity, particularly to the expanding DART system in the Greater Dublin Area and Eastern region.
The carriages could also be deployed for a future Cork area rapid transit system.
Around Dublin, the new carriages will facilitate the wider DART+ Programme – extending from Dublin City centre to Drogheda in the north, Maynooth in the West and Celbridge/Hazelhatch in the southwest.
It is estimated this will increase the number of people who can access a frequent, high-capacity rail service from about 250,000 at present to 600,000 in the future.
If approved the carriages will be delivered to the Irish rail system in 2026.
This is in addition to the 95 new electric and battery-electric DART carriages already approved by the Government last December, for delivery in 2025.
Increased cost of running schools and school transport
As part of the cost-of-living measures to be enacted this year, Education Minister Norma Foley will bring a memo to Cabinet in relation to the €90 million being provided in one-off additional funding to support increased running costs for primary and post-primary schools in light of rising energy costs.
The additional grant will be paid at the rate of €75 per pupil at primary level and €113 at post-primary level.
Enhanced rates will also be paid in respect of pupils with special educational needs.
The funding is being provided represents a very significant increase to cover increased school running costs.
The minister has said that the matter will be kept under review in 2023 and should additional funding be required, it will be considered in light of all other competing demands.
In addition to the €90 million for schools, €10 million in funding is also being provided for existing school transport providers to address the ongoing increased fuel costs.
Taoiseach Micheál Martin and Minister for Foreign Affairs Simon Coveney will also update ministers on the engagement between Government, the EU, the British Government, political parties in the North, on formation of NI Executive.
Martin will also bring an update on the Shared Island initiative to Cabinet and he will outline the €132 million spent to date on cross-border initiatives such as the Narrow Water Bridge and Ulster Canal projects, as well as further upcoming plans.
As reported last week, Housing Minister Darragh O’Brien will seek sign off on increasing the social housing income eligibility thresholds for local authorities by €5,000 from the start of 2023.
This is expected to make an additional 16,000 households eligible for social housing supports.
Agri Food Regulator to issue fines
Meanwhile, Minister for Agriculture Charlie McConalogue will seek approval to commence the legislative process for the establishment of the body to be known as the Agri Food Regulator.
It is understood the regulator will be able to issue fines of up to €10 million for the breaches of unfair trading practices.
The regulator will have powers to investigate practices such as the late payments to farmers and primary producers as well as the misuse of trade secrets and unfair contract changes.
It will be able to issue fines of up to €10 million or 10% of turnover on companies found to be breaching these unfair trading practices.
McConalogue previously said the office will have “real teeth” and will “shine a light” on unfair trading practices within the sector.
The recruitment of a chief executive officer (CEO) for the Agri Food Regulator is currently ongoing with interviews set to take place shortly.
The CEO will answer to a board of eight which will have at least two members from the primary processing sector.
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No surprise there then. Party of sham
@Kevin Conway: u think it only happens there
Can anyone think at this stage that ANY govt has its peoples wellfare at heart … a resounding NO. All rotten to the core.
@Lydia McLoughlin: wow wow hold yer horses there lydia. Yep u right
@Lydia McLoughlin: critical thought would tell me that if the Democrats are the ones that brought the bill forward, well then they have the publics and interest at heart.
@Lydia McLoughlin: at least Biden is making some sort of attempt to fix it.
@Kevin Conway: I dunno. The pessimist in me always thinks it’s all a front. Promise this, promise that but its only half hearted or it turns out it can’t be done anyway .. our lot are masters at it! Only those consulted benefit by producing report after report to come back and report it can’t be done!
Yes Minister springs to mind!
I just find it interesting this article did not say the reason the Republicans voted against it. Yes we heard why the Democrats think they voted against it but not their own response. Usually when Republicans vote against something that seems to make sense they have a reason that isnt as nonsensical as this article suggests. Im not saying I agree with them I’m just saying this is biased.
@Sean Casey: Yes, it does make sense. They want the dark money since it benefits them more than the Democrats.
@Peter Peterski: Why wasnt Mitch McConnells reasoning covered in the article?
@Peter Peterski: even though the article says the democrats benefited substantially more $1.5 million compared to $900k
@Anthony Mcgee: 1.5 BILLION versus 900 million. Just a tiny bit more.
Unfortunately In the end you get “the best government money can buy”.
Both sides are guilty but it would seem the Democrat party is at least willing to change the rules.
The amount of money (that doesn’t have to be declared where it comes from) that’s spent by on political advertising is phenomenal.
Less than 7 weeks to go until the midterms, in the US you can’t watch TV or watch anything online without being bombarded constantly by political attack ads.
This election cycle I’ve noticed that “radical” seems to be the buzzword. The 2 candidates for senate and the 2 candidates for governor in my state are running ads where they both just accuse and call each other “too radical for Wisconsin”
Political donations are corruption, plain and simple
Breaking news! facts in an article completely contradict the headline…
The irony of the democratic party bemoaning nefarious uses of political funding in American elections, while they themselves are funding extreme far right candidates in the US primaries to both make the Republican party look as far right as possible by association and also because they believe they can motivate undecided voters to vote for the democratic party candidates if the perceived alternative candidate is a far right looney that they themselves promoted into the political spotlight..
https://www.washingtonpost.com/politics/2022/09/12/democrats-interfere-republican-primaries/
Just to add, the amount of money spent by the Democratic party funding far right candidates in the current US primaries, is an eye watering $50 million to date.
@David Van-Standen: they want the ‘radical’ Republican candidate to win the Republican primary because they reckon the mad radical Republican candidate will lose to the Democrat candidate in the actual election in November. They are funding the weakest Republican in the primary so they beat them in the election.
It’s not for ideological reasons it’s so they can beat them in the actual election.
The Republicans did the same, backing Bernie Sanders to win against Hillary in the Democratic primaries.
It’s inherently risky, the mad radical they think will lose can end up winning sometimes.
After all, Hillary Clinton lost to Trump in 2016.
@Diaspora’d: thanks, that’s what i said.
I never claimed it was ideologically motivated, just a nefarious use of funding, in an attempt to rig the ultimate outcome in favour of the democratic party, while also slinging muck at the Republican party.
I just cannot figure how the Irish Government hrre have been able to afford Brexit, Covid, and, now the cost of living crisis it seems is going to bring a give away budget! Who is bank-rolling them? and Why?
Remember they announced a surplus of €6.3bn recently!
@Caoimhghin Whyte: the EU massively supported the Covid measures.
The benefits of being in the bloc are there to be seen.
Republicans cannot stand against corruption and still support Trump. They don’t want to live in denial. Might as well defend corrupt money and don’t be called hypocrite later
Just like ours.
Biden could be on fire and the Republicans wouldn’t urinate on him to put it out. They wouldn’t do that for any democrat and that’s what’s wrong with politics in this day and age, the most basic concepts of civility is dead and gone
Dark money is that given to the Democratic party by the likes of Planned parenthood (who make a profit and promote abortion).
Should cap all donations to say around 50′id say
have your say