State to take 90% of future bank bonuses

SOME 90 per cent of future bonuses paid to senior bankers is to be confiscated in a Government measure to be introduced early next year.

Minister for Finance Brian Lenihan said he would amend the Finance Bill, giving effect to budgetary measures, providing for a 90 per cent charge on bank bonuses. The Dáil will debate the Bill in January.

“This should copperfasten this matter, and put it beyond any doubt whatsoever,” he added.

The Minister was responding to reports that AIB bank executives were to share €40 million in bonuses deferred since 2008.

Mr Lenihan said he made it clear no bonuses were to be paid to senior bankers last year or this.

He welcomed the comments by AIB executive chairman David Hodgkinson, who had made it clear he believed bonuses belonged to a culture relating to the bank’s past.

Mr Lenihan also welcomed Mr Hodgkinson’s comment that the bank currently relied on Government and taxpayers’ support, and that he was working to ensure in future that pay and benefits were more reflective of the organisation’s responsibilities, performance and the general economic climate.

Labour finance spokeswoman Joan Burton said it was shameful that Mr Lenihan had launched an attack, in legislation, on public service pensions and those on the minimum wage on a day “when he has the gall to come into this House and stand over the reports that the high-level employees in AIB were to receive a €40 million bonus payout”.

Ms Burton said this was a testament to the bonus culture that had destroyed the banking system, cost many people their businesses and many people their jobs.

She asked “where were the brains of the two Brians” on the night they negotiated the bank guarantee to ensure that such bonuses could not be paid.

Earlier, Fine Gael deputy leader Dr James Reilly called on the Government to recoup the bonuses paid by way of taxation. The bonuses should be taxed at a rate of 99 per cent.

“In the United States, President Obama taxed them at 90 per cent, and the Government here should show some leadership and go further. The people want that.”

Dr Reilly said it was a burning issue for people because the trouble the country was in was due to a lack of regulation, political ill-judgment and bankers being paid bonuses for achieving figures rather than concentrating on the security of their banks and the best outcomes for their customers.

“The Government has an opportunity to show some leadership, late in the day as it might be,” he added.

Labour leader Eamon Gilmore said people on the minimum wage would be brought into the tax net, reducing by €40 a week the earnings of a person working 40 hours a week and taking €8.42 in the universal social charge.

This would bring the national minimum wage for someone working 40 hours a week to below €300 a week, specifically to €297.

This meant, said Mr Gilmore, that somebody working 40 hours a week on the new national minimum wage would receive less than the average bonus paid to AIB executives, which was being allowed by the Government.

Sinn Féin’s Caoimhghín Ó Caoláin said the Government’s proposal on the reduction of the minimum wage was an “absolutely disgraceful proposition” which would cause untold harm to those families trying to cope at that level.