Irish Examiner view: A back door to banker bonuses

Minister facilitated policy bypass

Paschal Donohoe, Minister for Finance, has facilitated the circumvention of a strict government policy put in place for good reason.

The purchase by AIB of stockbrokers Goodbody raises the issue of whether caps on bankers’ bonuses should be extended to other financial sectors.

As it stands, a number of AIB staff who transfer to Goodbody will not be subject to pay policies put in place in the banking sector in the wake of the financial crisis.

Finance Minister Paschal Donohoe seems to see nothing wrong with this type of transfer mechanism — but it is bound to open the door to bonuses again in a bank bailed out by the taxpayer to the tune of €32bn. At the same time, he insists that there has been no change to government policy on remuneration at Irish banks. That is like saying a building is secure because the front door is locked, even though the back door has just been opened.

When it comes to misconduct, the banks are repeat offenders. The mortgage tracker scandal is ample evidence of this, and of their proclivity to engage in conduct that contravenes acceptable business practice. But they are not the only transgressors when it comes to regulation, as the latest Davy stockbrokers debacle shows.

The fact is that the minister of finance has facilitated the circumvention of a strict government policy put in place for good reason. This staff transfer mechanism is a back door to what got us into financial trouble in the first place. It also threatens to further desensitise us to banking misconduct.