Lobbying for Bank Bonuses must be resisted

15 March 2019

Labour Finance spokesperson Joan Burton has called on the Minister for Finance to stand firm against growing pressure from banking lobbyists and investors to lift the bonus and wage caps in State owned banks.

Deputy Burton also called for clarification on any proposed future share sales of AIB.

Deputy Burton said:

“The report from Bloomberg last week based on a Freedom of Information request, revealed Minister for Finance Pascal Donohoe has yet again come under further pressure to lift a €500,000 pay cap for bankers employed in State owned and bailed out banks.

“This pressure from large institutional investors led by Deutsche Bank and five other groups would appear to be part of concerted effort to lift the pay caps in place to benefit already well paid senior staff. A review is currently underway, but we don’t yet know when that will be published, but obviously the Government is under huge pressure to drop the pay cap.

“These State imposed measures which include a super tax of 89% on bonus payments exceeding €20,000, came into force following the 2008 bank guarantee which cost the Irish tax payer €64.1 billion.

“The Minister must hold his nerve. Any softening of the current government stance would act as a slap in the face to Irish people when the consequences of the bailout are still with us.

“It would be completely unacceptable for state owned banks to start paying out bonuses and salaries of more than half a million euro. We can’t afford to go back to those days again.

“The news that the Minister is committed to selling down bank shares over a series of transactions also needs to be clarified. When does the Minister intend to start selling shares in AIB again?

“The Programme for a Partnership Government only committed to selling 25% of AIB and that the shareholdings would be held in the best interests of the Irish people. AIB is set to pay a dividend of €461m this year, and 29% of that has been lost to the state after last year’s share sell off which the Dáil voted against.

“The Labour Party has previously called for these shares to be retained and dividends reinvested in Ireland rather than using it to pay down debt. AIB and Bank of Ireland were bailed out from the proceeds of the National Pension Reserve Fund. Any windfalls should be placed back into its successor, the Ireland Strategic Investment Fund and the pay caps retained until the legacy of the crash is dealt with.“

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