Lenihan: Bank chiefs not likely to face salary cap

FINANCE Minister Brian Lenihan has admitted that the chief executives of banks in which the Government has a major shareholding are unlikely to be subject to the new €250,000 salary cap on public sector workers.

Mr Lenihan acknowledged yesterday that there would be a difficulty in attracting and retaining suitably qualified personnel to run the country’s main banks if a maximum salary limit of €250,000 was in place.

However, the minister said he was not personally convinced the current maximum salary of €500,000 for the banking sector is the appropriate limit and he recognised it was not an easy figure for people to accept.

He agreed, though, that the €500,000 limit was the recommendation of experts who had examined international practice and prepared a report for the Government on the issue.

Mr Lenihan said that he would normally have expected to have paid more than €500,000 to acquire the services of the recently appointed executive chairman of AIB, David Hodgkinson, a career banker with leading international bank HSBC.

He stressed that no senior bankers had received any bonus payments in either 2009 or 2010.

“There will be no bonuses paid to bankers until these banks start making profits and returning money to us again,” the minister added.

Speaking on RTÉ radio, Mr Lenihan said he hoped to use his influence as a shareholder to try and extend the new salary cap of €250,000 for public sector workers to the semi-state sector. However, he acknowledged there are legal difficulties in trying to alter the contract of incumbent post-holders in state agencies such as the Health Service Executive, the ESB and An Post, as well as companies in the semi-state sector.

The two best-paid heads in the semi-state sector are ESB chief executive Pádraig McManus, who earned a total package of €752,000 in 2009, of which €412,000 was basic salary, and the chief executive of the Dublin Airport Authority, Declan Collier, who earned a total package of €568,000 last year. No head of any state company or agency has made any public comment to date to indicate they will accept a reduction of their salary to €250,000.

In his budget on Tuesday, Mr Lenihan thought the position of the minister for finance as a shareholder or statutory stakeholder in such companies could be used to “enforce the objective of the maximum salary within a reasonable timeframe”.

Mr Lenihan said placing a maximum salary on office holders could be achieved through legislation.