Irish Bank Officials’ Association puts top bankers’ pay on agenda

The head of the Irish Bank Officials’ Association — the IBOA — has put the issue of top bankers’ pay back on the agenda demanding that the Government retain its cap on chief executives’ pay and introduce new limits for share incentives as it sells down its stakes in the banks.

It comes as the IBOA — which represents 15,000 finance staff across Ireland, which compares with a peak of 23,000 on the eve of the crash — is due to complete pay negotiations with Bank of Ireland this week and with Ulster Bank next week.

General secretary Larry Broderick told the Irish Examiner there was growing concern that chief executives at State-owned banks would again top excessive amounts in pay and in share-based incentives as the Government starts to sell down shares later this year.

Pay caps would need to be extended even as the Government launches its first IPOs of bank shares, while some sort of correlation needs to be established linking pay across all staff in the banks.

“Our view is that the pay of the chief executive should be correlated with the pay of the lowest bank official in the bank or the financial institution,” Mr Broderick said.

“There should be some correlation between the bottom and the top.

"Despite the fact that the Government introduced all sorts of caps there does seem to be growing concern from our point of view that as banks come out of State ownership that there is no commitment to retaining the cap.”

The IBOA did not accept the argument that unless banks pay “huge sums” to their chef executives that they will not attract the best talent in the industry, he said.

He said he was, however, reluctant to say what the correlation or multiple should be between pay of the the top executive and the lowest-paid grade.

The “gulf” in pay that emerged during the boom years helped lead to the finance union’s members losing their jobs, and to the Irish public “paying the price” for the banking bust, Mr Broderick said.

He said that share incentives in the past were used extensively across all grades in the banks.

“Our concern would be that there was a disproportionate incentive to the senior executives,” he said.

“There should be some mechanism that limited the amount of shares available to the senior executives and maybe it should be capped at a certain amount for people at a senior level.”

In its official response to the banking inquiry yesterday, the IBOA added its criticism to the report, saying it did not go far enough.

The IBOA said: “We had expected the Banking Inquiry would bring forward a comprehensive raft of recommendations to address the wide-ranging deficits in the culture, governance and oversight of the banking sector — especially in light of the catastrophic events of the recent of the recent past and their devastating impact on the lives and livelihoods of the vast majority of the people of this country — including workers in the financial services sector.”

Experts last week said they were disappointed that the report had failed to uncover the precise reasons that the banks’ internal controls were ignored.

Yesterday, the IBOA said: “One of the key features of the banking crisis was not the lack of credit control mechanisms to monitor risk — but the fact that the red flags, which theses procedures would have highlighted, were effectively ignored.”