Bank chiefs to face pay cut, says Lenihan

SENIOR executives and directors in all six banks under the Government’s guarantee scheme will have their pay cut and a cap placed on their salaries, Finance Minister Brian Lenihan has said.

A committee exploring the issue is due to report in the next few weeks, and by March 5 at the latest.

Fine Gael has accused the Government of failing to honour its promises on reducing the pay of senior personnel of banks that the State is bailing out. The party’s enterprise spokesman, Leo Varadkar, said the Government was “bottling it” on bankers’ pay.

“The Government has belatedly started talking tough about pay restraint in the banking sector and has secured many headlines as a result. But now it appears the Government is bottling it when it comes to forcing pay cuts for senior bankers when Eamon Ryan in media interviews started using legal arguments as a basis for not being able to force pay reduction,” he said.

Mr Varadkar added that pay restraint and pay cuts for top executives must be part of any bank recapitalisation plan.

However, Mr Lenihan pointed out that the Government intends to cap and cut bankers’ pay, but not just in the banks the state is preparing to capitalise.

He pointed out that under the €440 billion bank guarantee scheme put in place late last year they had the power to curb pay in the institutions covered.

“Under that scheme we took power to ensure executives’ remuneration can be controlled. We have an assessment coming to government in a matter of weeks,” he said.

When asked what the cap might be set at, the minister said that Taoiseach Brian Cowen indicated he expects to see a reduction of at least 25% in senior executives’ pay and directors’ remuneration and a definite cap on remuneration.

An independent committee, chaired by former secretary general in the Department of Finance, Eddie Sullivan, is investigating the issue of pay and must report by March 5 at the latest.

The institutions must report to them how their pay policies reflect their plans to reduce excessive risk taking and encourage the long-term sustainability of the covered institution.