Brian Lenihan Jnr (Dublin West, Fianna Fail)

When the Credit Institutions (Financial Support) Bill was before the House, many Members expressed reservations about the levels of remuneration and bonus arrangements that were in operation for senior banking executives. That debate continued in the discussion on the scheme the Government drew up on foot of the Credit Institutions (Financial Support) Act in connection with the guarantee. The Government listens to views expressed on all sides of the House. During the debate on the Credit Institutions (Financial Support) Bill the concerns expressed by many Members at various times of day and night were very carefully noted in my Department and the scheme was drawn up in the light of concerns expressed by Deputies on all sides at that stage.

The decision to establish the Covered Institutions Remuneration Oversight Committee was taken on foot of the scheme approved by the House and reflected concerns raised by Members of this House. That committee has now reported. I have not as yet had time to consider the details of the report and therefore I am not in a position to put it before the House today. In any event before I take any decision on the recommendations, I propose to bring the report to Government for its consideration.

I can, however, say that the basis of the report is to consider the salaries and remuneration arrangements that apply to the chief executives, chairmen and directors of the different covered institutions, establish what the salaries in comparable commercial institutions in Irish life are and recommend scales of remuneration in accordance with that basic comparison. That is the basis upon which the committee has drawn up its recommendations. As I said they will be before the House in due course.

I wish to emphasise that this committee is not some method of kicking this issue to touch. It is the means of raising and dealing with the issue in the context of the deliberations of the House itself last autumn. That said, I appreciate that because of what has come to light in the banking sector since then, Deputies are anxious to make statements about what they deem to be an appropriate level of remuneration. However, I need to await consideration by the Government of the report and its decision in that regard. Prior to the recapitalisation decision the Government insisted on having certain preconditions on remuneration laid down. Those preconditions were without prejudice to whatever would be recommended by the committee. So, for example, Allied Irish Banks and Bank of Ireland agreed an immediate curtailment of salary and remuneration of 33%. No performance bonuses will be paid for senior executives at the capitalised institutions. No salary increases will be made in 2008 and 2009. In addition the non-executive directors' fees were reduced by 25%.

That was done as a basic commitment or precondition of the capitalisation itself. We are now in possession of a report that covers the salary scales, which will be dealt with expeditiously by the Government. However, the basis of the report is a scientific assessment — not a popular assessment — of what comparable companies in Irish life obtain. It is worth noting that the balance sheets, for example, of the two main financial institutions bear a substantial relationship to the gross domestic product of the economy itself. These two institutions are very important and the report should be considered in that context. Again, the matter will be brought to Government and a decision will be made on it in due course.

In so far as legislative provision is required, which is what these amendments are about, legislative provision to deal with this matter exists in the guarantee scheme. The legislative provision in the guarantee scheme is wider than any legislative provision that can be inserted here because the legislative provision inserted here would only apply to a capitalised institution which under the legislation could only be one of the three quoted credit institutions on the Irish Stock Exchange. The legislative provision that is already in existence covers six institutions and it is important that those six guaranteed institutions all have their senior executive level remuneration dealt with in an orderly way. That is what I propose to do.

See this speech in context