The decision to lift restrictions on “bonanza pay and bonuses” for staff at three banks bailed out by the State is “galling” given the tracker mortgage scandal and the cost-of-living crisis, the Dáil has heard.
Roisin Shortall said the tracker mortgage scandal has made it difficult for the public to believe that those at the top of the banking sector have undergone a “Gordon Gekko to sackcloth” conversion.
The co-leader of the Social Democrats called on the Minister for Finance Paschal Donohoe to justify his decision to lift salary pay caps of €500,000 for senior bank management.
Earlier this week, Mr Donohoe relaxed rules on bonuses of up to €20,000 and around other workers’ benefits at three banks – Bank of Ireland, AIB and Permanent TSB.
“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?” says @RoisinShortall. https://t.co/8dWWEMU141
Advertisement— Social Democrats (@SocDems) November 29, 2022
Ms Shortall said: “We are told he needs to do this, so we can attract good people and the top talent to run our banks.
“It seems no self-respecting high-flying banker would want to work for a less than €500,000, as if they could not survive on a salary that is more than double that of the Taoiseach.
“The banks’ alleged conversion from Gordon Gekko to sackcloth and ashes is pretty hard to swallow given their treatment of their customers during the tracker mortgage scandal.”
This year AIB was fined a €96 million by the Central Bank for overcharging tracker mortgage customers.
Ms Shortall said it inflicted “devastating consequences” on almost 13,000 households.
“Meanwhile, Bank of Ireland was hit with a record €100 million fine for its role in the scandal that ruined thousands of lives and resulted in the loss of hundreds of homes,” she added.
“That was just two months ago. As if all of this were not bad enough, lifting these restrictions on bonanza pay and bonuses is especially galling given the cost-of-living crisis that is decimating the incomes of so many working families and workers generally throughout the country.”
Mr Donohoe defended his decision, saying the previous culture of the banks has changed through the introduction of legislation and regulations.
“It is by the steps this and previous Government have taken with regard to the regulation of our banks,” Mr Donohoe said.
“It is about the changes that are fundamental in nature that have happened in the regulation of the banking sector since those awful years, months and days of the global financial crisis.
“It is the reason that since 2013 the Central Bank of Ireland has had legislation in place on an enhanced fitness and probity regime.
“This means those in senior roles in our banking system have to go through a very thorough evaluation process and ultimately require the consent of the Central Bank to fulfil particular roles.
“It is also the reason we require our banking system to hold a very high level of capital to prevent the destructive, harmful, difficult and traumatic consequences of a decade and a half ago and what banking difficulty can do to the rest of our economy.”
He said the current banking sector has a “fundamentally different” regulatory environment from what existed in the banking crash.
Mr Donohoe told the Dáil he will bring forward legislation on the senior accountability regime, which he hopes to be before the Dáil before the Christmas recess.
He said it will “deepen and enhance” individual accountability of those in the financial sector, and provide the ability to sanction individuals.
Mr Donohoe added: “Of course I appreciate the sensitivity of this decision given the public hurt and public emotion that has been caused by all of the issues.”
