Bankers’ pay - Thumbing their noses at taxpayers

WILL the banks ever learn?

Having contributed massively to the collapse of Ireland’s fiscal system, it emerges that five banks last year paid board directors way above the level recommended by a Government-appointed committee.

As today’s front-page report shows, 37 out of 44 non-executive members on the boards of banks protected under the €440 billion guarantee scheme, received far in excess of the payments recommended by the Covered Institutions Oversight Committee (CIROC) set up by Government to assess pay levels in the banks concerned.

Nor is it the first time the rules governing banks have been bent. As we know, four banks – AIB, Bank of Ireland, Anglo Irish Bank and Irish Life and Permanent – gave cash allowances and perks to senior executives to offset the effects of a Government pension cap. In another twist, Finance Minister Brian Lenihan allowed AIB to pay bonuses to overseas staff and those with bonus contracts.

In the murky world of banking, as taxpayers know to their cost, the much-trumpeted principles of transparency, accountability, and compliance with regulations, have regularly been discarded, seemingly without causing a ripple in the collective conscience of those responsible for the corporate governance of our banks. Not surprisingly, bank directors stand accused of failing to curb the unacceptable practices, including downright illegal goings on around them, things that bank bosses justified in the name of competition.

What worries the public is that many of the senior managers and directors involved in the crisis are still in place, running the banks and sitting in boardrooms. Let’s hope the changes proposed by Financial Regulator Mathew Elderfield of the Central Bank will ensure directors take a more active role at board level in future. With the benefit of hindsight, bank chief executives will be barred from becoming chairman. The number of board meetings will be increased, and not before time.

As things stand, the public has reason to be worried. How could people not be worried by the Government’s failure to spell out how much the bank bailout will eventually cost the country, especially in view of the severity of the ‘haircut’ being applied by NAMA to property portfolios which are now worth a great deal less than originally thought.

The growing uncertainty is causing considerable anxiety up and down the country where hundreds of thousands of people are drowning in debt and struggling to make ends meet. Worryingly, the Government’s failure to get a firm grip on the real cost of the bank bailout is undermining confidence here at home and internationally. In its latest downgrading of Ireland, the Standard and Poor’s rating agency, has put the possible cost of bailing out the banks at a whopping €35bn –a far cry from the Government’s estimate of €22bn.

Instead of engaging in drip-by-drip leaks, no doubt calculated to condition the public for even worse news to come, it is high time the Government got its act together and made a clear statement on how much the bank bailout is ultimately going to cost the taxpayer.