Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

When publishing the Review of Remuneration Practices and Frameworks at the Covered Institutions, on 12 March 2013, I indicated that the Government had formed the view that with the remaining covered institutions still incurring losses it was an inescapable conclusion that the cost base of the institutions needs to be reduced further. This is essential if they are to return to profitability, be in a position to support the economy and repay the State's investment through a return to private ownership.

On behalf of the Government, I have now directed the banks to come up with plans as to how they intend to address this issue in a manner that can help meet the State's objectives. I expect the value of those plans to mean a saving of between 6% and 10% of total remuneration costs through reductions in payroll and pension benefits, new working arrangements and structures that deliver efficiency gains. In the circumstances, the Government has not focussed on individual salaries, employees' levels or specific measures. While the three remaining covered institutions face equally daunting challenges, they are individually at different stages in addressing their particular needs in their respective drives to return to profitability and are best placed to respond to the wishes of the Government.

The Deputy will note that the review opined that salaries at the senior executive level and above, at the three remaining covered institutions, are generally behind the market as compared to quoted Irish companies and the Mercer European Financial Services survey based on measures implemented to date, namely but not solely due to the withdrawal of incentives. It also stated that when incentives are taken into account this disparity widens significantly. There is always a difficult balance to be struck between rewarding and retaining talent at this level, ranged against the financial circumstances of the banks and the measures imposed upon citizens to address our current challenging economic and fiscal circumstances. Simply reducing salaries above the €100,000 level would not generate sufficient savings to tackle the issue. If remuneration costs are to be reduced with the aim of returning to profitability, then sacrifices at all employees' levels will be required.

It can never be forgotten by management and employees of these banks, both past and present, that without enormous cost to Irish taxpayers these institutions would not have survived and that this needs to be borne in mind during future discussions.

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