Donohoe scraps banker pay cap brought in after bailouts
The cap was removed from Bank of Ireland in 2023, after the State sold the last if its stake in the lender.
The cap will now be scrapped at both AIB and Permanent TSB. The decision comes immediately after the sale of a final 2pc stake in AIB. Taxpayers still own 57pc of PTSB but the decision has been made to extend the end of pay restrictions there in order to provide a level playing field.
Salary caps of various kinds were widely introduced in Europe after the financial crisis, when a culture of high pay and big bonuses linked to aggressive growth and risk taking were seen to have contributed to the ultimate catastrophe across the banking sector.
The European Union loosened many of its restrictions as early as 2014. In Britain salary and bonus caps were scrapped in 2022.
The Minister for Finance, Paschal Donohoe, said lifting the pay cap was a sign of normalisation.
'Recognising that the State has significantly divested from its bank shareholdings, and in line with the Programme for Government commitment to complete the task of normalising the domestic banking system, I am announcing a further normalisation of the relationship between the State and the domestic banking system. This means the removal of certain crisis-era measures which continue to be in place today, including certain restrictions pertaining to remuneration.
These restrictions were introduced by way of contract with the banks recapitalised by the State following the financial crisis. When introduced, these contractual restrictions had no expiry date or sunset clause.'
Limited bonuses have already been allowed back at the so called covered banks, although a super tax at 89pc remains in place for any bonus above €20,000.
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