The Minister for Finance is expected to ask the Cabinet today to approve a plan that would see restrictions on salary and variable pay for bankers working at lenders which were bailed out by the State eased.
It is understood that the proposals include allowing banks to pay bonuses of up to €20,000 to their staff.
Restrictions on non-pay benefits, such as private health insurance and childcare, would also be lifted.
If approved the plans would also see the current salary cap of €500,000 removed from Bank of Ireland, which is no longer partially State owned.
While the other bailed-out banks which the State still owns a majority stake in, AIB and Permanent TSB, would have the same salary cap lifted when the State’s shareholding reduces to a specified appropriate level, it is understood.
Remuneration restrictions were put in place on the banks in the wake of the financial crash over ten years ago, as a result of what subsequently emerged about the actions and practices of senior bankers across the industry.
However, in recent years the banks impacted have been lobbying for them to be eased or removed, as they claimed it was putting them at a competitive disadvantage against competitors inside the sector and other companies outside it who are competing for similar talent.
The Financial Services Union (FSU) said that the lifting of the restrictions on variable pay and benefits up to €20,000 will benefit ordinary bank staff.
“Staff in the retail banks should not be treated differently to other staff working in the wider financial services sector who have access to financial assistance with healthcare and childcare costs and access to approved profit-sharing schemes among other benefits,” said John O’Connell, General Secretary of the Financial Services Union.
Speaking on RTÉ’s Morning Ireland, Mr O’Connell said bank workers are “now dealing with the biggest logistical change in banking, which is the departure of two banks”.
“So, we think now is the time for the Minister to act and to lift the restriction on the €20,000 payments to allow staff be rewarded sufficiently,” he said.
Mr O’Connell said now is the time for the banks to show that they have changed and negotiate with a fair reward structure for the staff.
He said the change is not about banks “deserving more, it’s about staff being shared in the benefits of the banks and the performance of the bank.
“Currently dividends are paid, share buy-backs are given to shareholders and staff and customers, by the way, should benefit from this report.”
He said that none of the union members “were involved in anything untoward in banking, just working diligently on behalf of the public, doing their jobs, and were victims as much as anybody else.
“But I think there comes a time where we have to start to look forward in our banking and it’s more about what type of banking system do we want”.
On the lifting of the pay cap, he said that is a matter for the minister.
“The important thing is really not what people are paid, but how they behave”, he said.
He said his members “have been extremely patient, the last group of workers in the state to have pay restrictions unwound.
“So, our interested is in sitting down and negotiating with the banks a fair reward system for those members.”
Under the current restrictions, salaries are limited to €500,000 a year, although the current and former Bank of Ireland chief executives had an exemption which allowed them to earn close to €1m.
Bonuses are also not allowed and there was also a special 89% super tax rate introduced on such payments in 2011 after it emerged some executives were still receiving contractual bonuses linked to performance.
But across Europe there has been a relaxation of such measures as the banking sector recovered.
A spokesperson for the Department of Finance declined to comment on the issue.
The proposals are likely to prove politically sensitive though, given the focus on the rising cost of living.
However, it is understood that all three of the coalition leaders have agreed to them.
The move comes just weeks before Minister for Finance Paschal Donohoe leaves that position to make way for Fianna Fáil’s Michael McGrath as part of the Government’s mid-point transition.
Today’s memo will go to Cabinet in the context of the completion of the banking review commissioned by the Minister for Finance.
It is also expected to include recommendations to legislate for access to cash services.
It is also understood to make proposals around removing barriers to competition in the sector.
Reacting to the news, Sinn Féin said reports that the restrictions on bankers’ pay look set to be eased are a kick in the teeth for struggling workers and families.
The party’s finance spokesman, Pearse Doherty, said the limits were put in place as a result of the “reckless actions of senior bankers”.
“Since then, we have witnessed the tracker mortgage scandal, with €270m in fines meted out to banks for the harm they inflicted on their customers,” he said.
“This year alone, AIB and Bank of Ireland were fined over €197m for regulatory breaches and actions that led to families losing their homes.”
“Harm was meted out even during the Tracker Mortgage Examination.”
He described the decision as tone deaf in the context of recent history and questioned the Minister for Finance’s priorities.
Mr Doherty said he recognised that clerical bank workers often start on low wages.
There is scope to ensure that workers are adequately paid, he said.
But, he added, this is not about those workers but more senior workers.
Mr Doherty said this is not the time to be reintroducing bankers bonuses but that there are other initiatives, such as child care, that can assist workers.
“Let’s get real about this here. This is about a demand from the very senior levels of banks to reintroduce bonus for those on higher ends. And that’s who’ll be benefiting from this €20,000 if the minister goes ahead with it,” he said.
Pearse Doherty said senior positions in AIB have been filled, despite the pay cap, and the decision to remove this cap “makes no sense.”
He told Morning Ireland it is crucial that the culture in banks changes and he said this has not happened.
“So in a situation where we see the largest ever fine issued to Bank of Ireland for the pain and suffering that it caused, not something that happened a decade ago, what happened just up to ten months ago, then I would not be saying to that bank – by the way, now you can pay your senior executive whatever you want. That is not acceptable,” Mr Doherty said.
This article was originally published by RTE.