Varadkar against bankers bonuses but hands tied

Taoiseach Leo Varadkar says he is not in favour of a return of bankers’ bonuses, despite admitting he may be powerless to stop their reintroduction in some banks.

Speaking at an event in Dublin, the Taoiseach said he does not want to see a return to such bonuses which were prevalent in the Celtic Tiger’ era.

However, he admits that the Government may be unable to prevent a return of the payments in some banks which are privately owned.

“The Government’s position is that there shouldn’t be bonuses for bankers and that we currently have a tax in place for such bonuses,” said Mr Varadkar.

“Having said that, there is a distinction between banks we control where we have a shareholding and those that we don’t.

“I wouldn’t want to see us going back to bonuses.”

Mr Varadkar was speaking after Finance Minister Paschal Donohoe confirmed he will look at allowing bonuses for the bailed-out banks for the first time since the 2008 financial crisis.

After the bailout, bonuses were effectively banned in Irish institutions with state involvement due to a “super tax” of 89% on the payments - effectively making them obsolete.

Mr Donohoe’s planned review will examine the caps on pay and bonuses. However, some banks are argue bonuses are needed to attract and keep senior bankers.

Yesterday, Bank of Ireland shareholders were in UCD for their annual general meeting. The State is the biggest shareholder in Bank of Ireland with a 14% stake. However, Mr Donohoe abstained from voting at the AGM, thus allowing the board to discuss the issue of bank bonuses.

At AIB, where the state has a 71% majority stake, executives want to offer a deferred annual share scheme to senior executives rather than pay cash bonuses. Under this scheme, bankers could be awarded their entire salary again in the form of shares.

Mr Donohoe said he will vote against this proposal on bonuses at AIB’s AGM next Wednesday. Mr Donohoe said he recognises the right of the chairman and board to put the resolution forward.

“However, I cannot vote in favour,” he said.