Nothing was more certain this week than that Minister for Finance Paschal Donohoe’s decision to lift caps on bankers’ pay would trigger an immediate adverse reaction. And so it proved.
On Tuesday, just hours after confirming the State had sold the last of the shares it held in AIB, the Minister announced there would no longer be a State-imposed cap on salaries at the three Irish banks.
The decision comes despite the State continuing to own 57 per cent of PTSB. The Minister explained the logic of the decision by saying it would ensure a “level playing field” between Bank of Ireland, which had already been given freedom on salaries back in 2022 after it repaid its State bailout, and AIB. Including PTSB meant it would not suffer a “competitive disadvantage”.
In the Dáil that afternoon, Sinn Féin leader Mary Lou McDonald slammed the return of what she called “gold-plated salaries” and “bumper bonuses for the top brass at AIB”.
She accused the Government of doing a “botch job” in its handling of the shares and claimed that €5 billion would have been generated “simply by holding on to the shares”. Noting that it was taxpayers who had bailed the banks out, she asked: “How do you explain this €5 billion loss to the Irish taxpayer.”
In fairness, the Minister, for now anyway, is holding firm on the 89 per cent supertax that applies to bonuses in excess of €20,000 across the three surviving domestic banks. And trying to get such a move through the Oireachtas would certainly be a heavy lift.
And, as it happens, once dividends, warrants, fees and other income is included, the final sale of the AIB shares left the State closer to €650 million out of pocket on the €20.8 billion it put into keep the bank afloat after the financial crash.
Not that that is an insignificant sum, especially when you consider that it is just relative to the break-even figure – not allowing for any of the investment return the State might normally expect on an investment that, in part, dates back 16 years.
Ireland’s two big banks may feel that they have finally closed the door on a past they would like to forget: it is likely to be some time yet before the memory of the crash and its fallout dims in the mind of the wider public, never mind the Opposition.
