Bankers’ pay cap ‘may have to go’

THE Financial Regulator has said that the cap on bankers’ pay levels may have to be removed.

Speaking after addressing the European Insurance Forum at Dublin’s RDS yesterday, Matthew Elderfield remarked that the banks will “probably need to pay bankers more” than the €500,000 basic salary cap introduced by former Finance Minister, Brian Lenihan, if they want to attract overseas management candidates, or as he put it, “outside talent”.

Earlier, Mr Elderfield told the forum that while the insurance sector is “an important and thriving part of the financial services sector in Ireland” and “one of the clear financial success stories here, in spite of the crisis”, regulation of the industry is to be tightened.

The Central Bank is to increase its regulatory staff, with numbers set to reach 113 by the end of the year. Actuarial staff numbers will increase and a specialist director of insurance supervision, reporting directly to Mr Elderfield, will also be appointed.

“Strong corporate governance is not a sector specific requirement, but should apply generally. Ireland’s reputation as a financial centre would take a very serious blow if the problems in the banking sector were to manifest themselves elsewhere, and stronger governance standards are designed, in part, to ensure this doesn’t happen,” Mr Elderfield told delegates.

He added that the new corporate governance standards are designed to fill “a gaping hole” in the Irish regulatory framework and to raise standards, “encouraging more focus on governance and broadening the gene pool of Irish corporate life by bringing more diversity and experience onto boards”.

Mr Elderfield said that the crisis here presents a lot of lessons to be learned about the way regulation and supervision generally didn’t work effectively.