Banker pay restrictions to stay: Ireland

Bloomberg

Ireland won’t change its restrictions on banker pay, its junior finance minister signalled, in the clearest sign yet that the rules will remain in place.
“I’m of the view the decision is made,” Michael D’Arcy said in a Bloomberg TV interview in Hong Kong. “The bankers in those institutions are well paid. The threshold is 500,000 euros and that’s in the very, very top percentile of anybody earning in Ireland.”
D’arcy’s intervention comes as the government considers a report from Korn/Ferry International on the future of the limits.
It capped salaries at 500,000 euros ($548,500) and banned bonuses at AIB Group Plc, Bank of Ireland Group Plc and Permanent TSB Group Holdings Plc as part of state bailouts during the financial crisis. Even if bonuses are reinstated, payments over 20,000 euros would face an 89 percent super tax.
“Any change in the regime was always going to be fraught with ‘political considerations’,” Eamonn Hughes, an analyst at Goodbody Stockbrokers in Dublin, said in a research note.
“The central bank’s ongoing culture review and the current mortgage tracker review probably need to be in the rear-view mirror as well before any progress is made on this issue.”
A decade after the financial crisis, banker pay is still a lightning rod in Ireland, where the sector remains hugely unpopular even amid warnings the restrictions are hurting the three banks. The limits should remain, at least until investigations into a mortgage overcharging scandal are complete, according to Ireland’s main opposition party, which props up the government.
“It would be inappropriate given we’re still awaiting the results of the investigations,” Michael McGrath, finance spokesman for the Fianna Fail party, said in a phone interview. “I don’t believe it should be considered.”
McGrath also discounted changing the rules to allow bonuses for lower-paid staff.
“I don’t think we can start thinking about differentiating between levels at least until we see” the Korn/Ferry report, he said.