Laws needed to protect ATMs, banking review finds

Paschal Donohoe defends lifting cap on bankers' bonuses

Minister for Finance Paschal Donohoe said pay caps were affecting recruitment for IT, banking risk, and cyber security jobs at the lenders. Picture: Gareth Chaney/ Collins Photos

A major review of Irish banking has recommended new legislation to ensure banks provide cash services and ATMs to consumers, communities, and small businesses.

The review has also confirmed the return of bankers' bonuses after they were axed in the aftermath of the 2008 financial crash.

The Retail Banking Review was set up over a year ago by Finance Minister Paschal Donohoe amid huge concerns that existing lenders, AIB, Bank of Ireland, and Permanent TSB would further tighten their grip over Irish banking operations.

Mr Donohoe told reporters the loosening of controls over pay and bonuses at the three bailed-out banks was a "difficult" decision but said the controls were affecting recruitment for IT, banking risk, and cyber security jobs at the lenders.

The review recommends lifting the pay and bonus caps for the three lenders and allowing them to offer bonuses of up to €20,000.

In the case of AIB and Permanent TSB, the top pay limit of €500,000 should be removed when the Government's stakes fall to "an appropriate level", the review recommends.

The review says there are "sufficient" levels of competition in Irish banking in the medium term, but nonetheless recommends legislation to ensure banks provide cash services and ATMs to consumers, communities, and small businesses.

The review also seeks an enhanced role for credit unions and for An Post to widen their banking services, and, to encourage new entrants, it wants reforms of the account switching code.

Regulators should also have a bigger say, but no veto, should banks seek to close bank branches in the future, according to the report.

"Implementing these recommendations will deliver real benefits for consumers and SMEs," Mr Donohoe said.