Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance his plans to reduce the salaries of senior executives at bailed-out banks, as opposed to reducing the payroll more generally, in view of the fact that more than 6,400 staff in these banks earn more than €100,000, 165 top executives in Bank of Ireland and AIB are receiving salaries in excess of €200,000 per year, 55 of these are earning more than €300,000 per year and 28 are earning more than €400,000 per year. [14401/13]

Michael Noonan (Limerick City, Fine Gael)
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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.

Pearse Doherty (Donegal South West, Sinn Fein)
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I thank the Minister for his response, albeit a disappointing one. Does the Minister remember voting to legislate for a €250,000 cap on bankers' pay in the covered institutions? Can he recall pressing the button on this side of the House and believing that it was the right thing to do? We have finally had sight of the Mercer report on high-level bankers' pay that was promised for the past two years. Some €120,000 later we have now seen it. Last week, it was announced that Mr. Richie Boucher has taken home €843,000.

The Minister's response to the Mercer report is that the banks must reduce their payroll costs, which does not target those whom he believed just a few years ago, when in Opposition, should have been capped. There are many in the banking system who did not cause the crisis and were not in Mr. Boucher's position in 2008. They are now under fierce pressure because the Minister has announced that there has to be a payroll reduction of between 6% and 10%. As we know, payroll reductions can come in many forms, including efficiencies or staff reductions.

Why has the Minister not dealt with the 6,400 staff who are earning above €100,000 per annum, the 165 top officials who earn in excess of €200,000, the 55 who earn over €300,000 or the 28 who earn over €400,000? When Fianna Fáil defended the €500,000 cap for bankers' pay, the Minister - who was in opposition - accused the then Minister for Finance of bottling it. May I say, with all justification, that the Minister has bottled it when it comes to bankers' pay.

Michael Noonan (Limerick City, Fine Gael)
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The issue of bankers' pay and bonuses is a fraught one, both in Ireland and other jurisdictions. It is only two weeks since the Capital Requirements, or CRD IV, Directive from Europe was under discussion. The UK authorities were pushing in the opposite direction to allow much higher bonuses than would prevail in any other jurisdiction. Around the same time there was a referendum in Switzerland which sought to draw up new rules for bankers' pay and bonuses.

We have agreed with the covered institutions caps for chief executives and chairpersons. We have also agreed that no bonuses of any sort will be paid. Internationally, bonuses are much higher than basic salaries in the banking profession.

It is an issue that arises periodically. It came up here extensively before Christmas with questions from many Deputies across the House but, in my view, it generated more heat than light. I wanted to act but on objective criteria, so I engaged Mercer to do an objective study. Mercer came up with the answers to what the remuneration levels were across the banks. The IBRC was the outlier and they were significantly higher for reasons referred to in the Mercer report, but we had liquidated IBRC by the time the report was published. We are therefore left with the three covered institutions.

In respect of the Bank of Ireland and the gentleman whom the Deputy has named in the House, it should be remembered that the State is a minority shareholder in that bank. We have 15% of the shares. The investors saw fit to reward that individual and made it a condition of their investment that they would retain him as chief executive. We are minority shareholders.

Pearse Doherty (Donegal South West, Sinn Fein)
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The Minister holds the shares of this State in the Bank of Ireland. They are in trust to him as the Minister for Finance who is a 15% shareholder. However, the Minister has not once uttered a word about the fact that Mr. Richie Boucher was paid €910,000 last year, the same as he was paid the year before. His base salary is above the cap, his car expenses are €34,000 and his pension comprises an annual contribution above €186,000. Not once, however, has the Minister ever raised the issue as a shareholder with a 15% share in that bank, which is probably bigger than any other shareholding. The Minister has bottled this issue.

Why did he stand as a member of the Opposition and demand that a cap of €250,000 be imposed? Can he justify that? One of the public interest directors who sits on the remuneration board, is a former Minister, Mr. Joe Walsh. That wee, cosy relationship was created many years ago whereby former Ministers and former Secretaries General of Departments were put in as public interest directors. Mr. Walsh sits on the remuneration committee and gets €90,000 for his work. One public interest director told me that equates to about 30 days' work. Given the state this country is in, can the Minister justify paying a public interest director €3,000 per day, while they allow the chief executive of the Bank of Ireland to walk away with €840,000?

Michael Noonan (Limerick City, Fine Gael)
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First, Mr. Boucher's pay and conditions were set out by the previous Government and the previous Minister for Finance and I inherited them as a matter of contract. As I stated, the Government is a minority shareholder, as it was fortunate enough to attract private investment from Canada and the United States into the bank. The Deputy will notice that since the private investment came in, while the shares were offered at 10 cent, earlier in the week they were trading at 16 cent or 17 cent. Therefore, it is difficult to put a case that a good job is not being done in there at present. The Deputy is accusing me of not attacking Mr. Boucher and other people personally. That is not the way I do politics. I do not organise lynching parties for individuals. That might be the way Sinn Féin does politics but I do not.

There is a general issue that the cost base of all the banks is too high. I have instructed the banks to get their cost base down and am giving them the kind of flexibility that my colleague in government, the Minister for Public Expenditure and Reform, Deputy Howlin, gave to the public service unions, wherein one size does not fit all. There are different ways of getting down the cost base and I want them to match their strategies to the circumstances of the individual banks. However, I want to get the cost base down and will do so. As for the former Minister, Joe Walsh, I do not know anything to suggest he is not a good director or that he is not carrying out its functions as a director.

Michael Kitt (Galway East, Fianna Fail)
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Go raibh maith agat.

Michael Noonan (Limerick City, Fine Gael)
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This is another example of how, because he is a former Fianna Fáil Minister, the Deputy wants to hang him in public.

Pearse Doherty (Donegal South West, Sinn Fein)
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No, the issue is paying €3,000 per day.

Michael Noonan (Limerick City, Fine Gael)
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Everything I know about him suggests he is a good director and a decent man. Why pillory him here in the House for the sake of a cheap headline?

Michael Kitt (Galway East, Fianna Fail)
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We must move on.