Dáil committee sharply critical of move to restore bankers' bonuses

In November, then finance minister Paschal Donohoe moved to allow banks to pay bonuses of up to €20,000 to staff, reversing policy in place since financial crash

Mr Donohoe defended the move in the Dáil, arguing that Ireland now has a banking sector 'with a fundamentally different regulatory environment to what we had in the years that led to the financial crisis and banking crisis'. Picture: Gareth Chaney/ Collins

Bankers' bonuses should not be reinstated, an all-party Oireachtas committee has said.

Then-finance minister Paschal Donohoe in November paved the way for banks to now be able to pay bonuses of up to €20,000 to staff, reversing a policy in place since the financial crash.

However, the Oireachtas finance committee, which features members of all three coalition parties, has sharply criticised the move in its report on banking, which is published on Wednesday.

The report says: "The Joint Committee is of the opinion that the removal of the cap on pay and bonuses in the banking sector is inappropriate and that such a policy change could be damaging to public confidence in the regulation of the sector and will not address longstanding customer issues. 

The Joint Committee recommends that the current restrictions on banking remuneration remain in place, including the €500,000 cap on an employee’s annual pay."

In early December, Mr Donohoe defended the move in the Dáil, arguing that Ireland now has a banking sector "with a fundamentally different regulatory environment to what we had in the years that led to the financial crisis and banking crisis".

However, he said he appreciated "the sensitivity of this decision given the public hurt and public emotion that has been caused" by the crash.

The committee's report focuses largely on the retail banking sector in Ireland and the withdrawal of KBC and Ulster Bank. It recommends that following the closure of Ulster Bank and KBC, the Central Bank "undertakes an analysis and review of the closure processes of both banks and the processes of the remaining banks in assisting customers to migrate their accounts".

It adds the use of paper forms for switching accounts is "not appropriate" and calls for vulnerable customers to be given additional supports in migrating their accounts.

The report also welcomes AIB's decision to reverse planned removals of ATMs in many towns, saying they "remain vital to significant cohorts of society, including rural and urban communities, and that the removal of such services would be detrimental to the economic and societal wellbeing of such communities".

It adds that legislation should be introduced to ensure retail banks be required to provide cash withdrawal and deposit facilities for personal and business customers within specified geographic baselines.

On the tracker mortgage scandal, the report says the joint committee has "significant concerns at the culture within lenders as reflected in both the tracker mortgage scandal and the subsequent response by banks, even following evidence of the significant damage to customers".