Olivia Mitchell (Dublin South, Fine Gael)
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The first matter is in the names of Deputies Kevin Humphreys, Robert Dowds, Anne Ferris, Ann Phelan and Arthur Spring. The Deputies have two minutes each to make an initial statement.

Kevin Humphreys (Dublin South East, Labour)
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I thank the Ceann Comhairle for selecting this matter for discussion.

Everybody will be aware at this stage that the Bank of Ireland general court will take place in the Burlington Hotel tomorrow. Resolution No. 2 relates to agreement of the report on directors' remuneration as outlined in the annual report 2012. The Minister of State will be aware that the Government has a 15% shareholding in Bank of Ireland. The current CEO at the Bank of Ireland receives a basic salary of €690,000, which is well above the Government cap of over €500,000. He also receives other payments, including pension contributions, bringing his package to more than €800,000 per annum. This CEO is one of the architects of the lending bubble at Bank of Ireland.

The Minister for Finance has indicated his intention to abstain on the aforementioned resolution. I put it to the Minister of State, Deputy Hayes, that abstention is not policy and in this case is not good policy. We need to send a clear message that these outrageous salaries by a bank bailed out by this State and its taxpayers are not acceptable. I urge the Minister to abandon the policy of abstention and vote "No" in this instance.

I am concerned that the Bank of Ireland has lapsed into its old ways. These excessive payments to its executives are over the top. It has also been revealed that the bank is using market research to trick people into giving up their tracker mortgages so as to improve its bottom line and pay super salaries to its top executives. I ask that the Minister exercise the State's shareholding to ensure this does not happen and to raise this issue at the annual general court tomorrow.

Robert Dowds (Dublin Mid West, Labour)
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Like Deputy Humphreys I believe it is unacceptable that the banks - in this case the Bank of Ireland - despite their having been bailed out by Irish taxpayers continue to refuse to cap executives' pay. I also believe the Government has been too soft on the banks for too long. It is now time for the Minister for Finance to take a stand on behalf of the public when dealing with them.

The banks are hounding mortgage holders, refusing to give credit to small businesses and, in paying these enormous salaries, laughing in the faces of Irish people. It is not that a cap of €500,000 is too low. What the banks are doing is brass neck greed. We all know that the banks played an enormous part in driving this country off the cliff. We owe them nothing. I call on the Minister for Finance to use the Government's 15% shareholding in Bank of Ireland on behalf of the Irish nation.

What bothers me most about the appalling behaviour of so many banks is the undermining effect it has had on people's confidence in our institutions which, in turn, affects our economy. For this reason alone, people would cheer at this issue being tackled.

Anne Ferris (Wicklow, Labour)
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I join with my colleagues' criticisms of the Bank of Ireland. I look to the Minister to ensure that the voices of the Irish people are heard at tomorrow's Bank of Ireland AGM. I have been contacted by constituents in Bray and elsewhere in Wicklow who are struggling to make mortgage repayments. While I accept and welcome the Government is doing what it can to assist those in arrears, it must also ensure the banks play ball.

I was surprised to learn that the Bank of Ireland conducted market research on tracker mortgages with a view to moving customers off them thereby strengthening its financial position. I would like the Minister to address this important matter at the Bank of Ireland's AGM tomorrow. I am not pleased that customers are being intentionally misled. I am concerned that Bank of Ireland is not alone in attempting this underhanded tactic.

I would also like the Minister to explain what social dividend is to be achieved, in terms of buildings or otherwise, from the support shown by the taxpayer to Bank of Ireland. To take the example of Bank of Ireland on College Green, why has the State not repossessed that building? Why has a request not gone in, at least, from the Minister's representatives that Bank of Ireland vacate those premises? The building it occupies is of significant historical value as the world's first purpose-built two-chamber parliament. I ask the Minister of State to ask the Minister to address these important matters, with urgency, at the AGM tomorrow.

Ann Phelan (Carlow-Kilkenny, Labour)
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I thank the Acting Chairman for the opportunity to speak on this extremely important issue. Tomorrow morning will see the annual general court of Bank of Ireland take place, with the nation represented by the Minister for Finance, Deputy Michael Noonan. The nation holds 15% of the bank's shares and, as such, is one of the biggest shareholders in the bank. Many items will come up at this AGM, one of the most important of which will be the remuneration of its directors.

It emerged recently that the chief executive of Bank of Ireland, Mr. Richie Boucher, was in receipt of more than €840,000 per annum, including salary and pension contributions, despite the cap on such salaries of €500,000. This would seem to be blatant disregard for the current economic situation in the country and further highlights the high-handed attitude to the Irish people who are struggling to make ends meet. How can it be argued that Mr. Boucher should receive such remuneration when the ordinary men and women on the street cannot get an overdraft, an extension to a loan or a mortgage? The bank's doors are closed to the people who need it most but it seems that is not so for its directors. Our small and medium enterprises are starved of cash and our farmers are resorting to Teagasc and the Minister for Agriculture, Food and the Marine to bail them out with funding for fodder for starving animals, only because the banks will not play ball. I ask the Minister, Deputy Noonan, if he is going to play ball with Bank of Ireland.

The feeling on the street is that the big companies and the banks, as well as the big men and women, are still coining it while the ordinary man and woman are struggling very hard against all that this economic situation is throwing at them. The word on the street is that little or nothing has changed. It is time we put things right and the Minister has an opportunity to do that tomorrow morning. I urge him to strike a blow for the people of Ireland, the people whom we represent, and say "No" to huge salaries for bankers. I urge him to restore to the Irish people some faith that we will do right by them.

Arthur Spring (Kerry North-West Limerick, Labour)
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I thank the Ceann Comhairle for choosing this topic.

This is the second time I have raised this issue with the Minister, Deputy Noonan. In light of the fact that Mr. Boucher, when appearing before the Joint Committee on Finance, Public Expenditure and Reform on 1 November 2012, showed what was nothing shy of a contemptuous attitude towards this House and our position as public representatives, it is fitting that we have representation at the Bank of Ireland meeting tomorrow.

There is no doubt that the banking licence application under the Central Bank Act 1971 defines responsibility for proper management and control of the credit institutions and the integrity of their systems as resting solely with their board of directors. Mr. Boucher joined Bank of Ireland in 2003 and became a director in 2006. He has been remunerated for his time as an employee, but surely to God we can question whether his appointment as a director benefited the shareholders and the State or was in breach of the Central Bank Act 1971. I am of the opinion that Mr. Boucher should be subjected to a shot across the bow. Every member of the public I have met would like to be at that AGM tomorrow. Many of them have never dabbled in shares and are not shareholders, yet they have felt the full brunt of the inability of the directors to govern the bank in a prudent manner that does not go against the interests of the nation. The people of Ireland would like to see a cap on remuneration and I think Mr. Boucher should be put in his place. He is one of the few remaining directors in the banks, of whom 55 have been removed since 2007. However, his position is something the people of Ireland believe is not worthy of the remuneration currently on offer. It also shows that there is a hangover in the bank from the old banking systems. The people of Ireland want to see a 15% execution. They want to say "No. Enough is enough." Let us get back to what is morally and financially correct.

Brian Hayes (Dublin South West, Fine Gael)
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The primary focus of the issues raised by the Deputies appears to be the voting intentions of the Minister for Finance, as a 15% shareholder on behalf of the State, on resolutions concerning remuneration and election of directors at the impending annual general court of the Bank of Ireland, which is to be held tomorrow, 24 April. In that regard, it might be helpful and useful if I outline the operational relationship that exists with the bank and the general policy on remuneration at the covered institutions before dealing with some of the more specific points that have been raised by colleagues.

The relationship framework provides that the State will not intervene in the day-to-day operations of the banks or their management decisions. These frameworks, which are bank-specific, are published on the website of the Department of Finance, having been agreed with our international partners, the troika. They recognise that the covered institutions remain separate economic units with independent powers of decision and that the boards and management teams retain the responsibility and authority to determine their institutions' strategies and commercial policies and conduct their day-to-day operations.

The current policy on remuneration at the covered institutions dictates that no individual may receive annual aggregate remuneration, excluding pension contributions, exceeding €500,000 unless specifically authorised. This overarching policy is now supplemented by the inescapable conclusion, arising out of the recently published review of remuneration practices and frameworks at the covered institutions conducted by Mercer, that as the remaining institutions still incur losses, their respective cost bases need to be reduced further. This is essential if they are to return to profitability and 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, the Minister for Finance has directed the banks to come up with plans for 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 somewhere between 6% and 10% of total remuneration costs, through reductions in payroll and pension benefits, new working arrangements and structures that deliver efficiency gains.

The Minister has not directed the specific measures that each bank should take, respecting their differing paths to profitability and the relationship with the State as explained above. I expect to receive an outline of each bank's strategy by the end of April. However, I expect that any measures proposed will require sacrifices at all employee levels and strong leadership to be exercised by the banks in delivering in a timely manner. The stakes for all are high.

I readily acknowledge the sacrifices and changes made by bank employees to date at all levels and recognise that this has been achieved without major industrial unrest in what is a critically important sector of the economy. However, it can never be forgotten by the management and employees of these banks, both past and present, that without enormous cost to Irish taxpayers these institutions would not have survived. This needs to be borne in mind during future discussions. It was in this context that the Minister decided to abstain on the resolution to consider the report on directors' remuneration. In regard to the other resolutions, I can confirm that the Minister has voted in favour of each of them, one of which relates to the election and re-election of the bank's directors.

In regard to some of the more specific points raised by the Deputies, I can confirm that the bank is in compliance with the existing policy on remuneration. As I mentioned, the current policy and previous iterations of it allowed for exemptions. It was under this parameter that the previous Government authorised a salary for the present CEO of the bank in excess of the then salary cap of €500,000. I am reluctant to discuss the remuneration details of an individual on the floor of the House. However, such details are well known, having been published in annual reports of the bank over the last number of years.

The Deputies will appreciate that this was the position the Minister for Finance faced on this particular issue.

The strong legal advice available to this and previous Governments is that pre-existing contractual commitments have to be honoured. In the case of the new CEO appointments at AIB and Permanent TSB, respectively, the Minister ensured the policy on remuneration was observed and it continues to be held.

Kevin Humphreys (Dublin South East, Labour)
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I am not asking the Minister of State to interfere in the day-to-day operations of the banks; rather, I am asking him to operate the taxpayer's 15% shareholding. Reducing the cost base by 6% to 10% normally affects ordinary working people in the banking sector. I ask the Minister of State to raise tomorrow the issue of senior executives on outrageous salaries, not ordinary everyday workers. I have grave concerns about some of the directors being re-elected to the board of the bank.

As a shareholder, I ask the Minister to watch how the banks are returning to their old ways. A tracker mortgage of €250,000 over the period could be worth up to €100,000 to the mortgage holder. The findings of market research will be used to inform and develop attractive products to encourage tracker mortgage holders to move off the product and ultimately improve the overall profitability of Bank of Ireland's mortgage book. That will be to the detriment of ordinary tracker mortgage holders. We need to exercise our 15% stakeholding and I ask the Minister of State to do so.

Robert Dowds (Dublin Mid West, Labour)
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In supporting Deputy Kevin Humphreys I will mention two points, the first of which has been passed to me by Deputy Peter Mathews, for which I thank him. The CEO is on the equivalent of nine Deputies' salaries. I appreciate that we only have 15% of the vote in the bank, but it would send a very important message to the people if we were to use it against such a high salary. We are in the position of having to ask public servants to take another pay cut. It would put us in a stronger moral position when requesting them to do so and obviously we will take a pay cut also.

Anne Ferris (Wicklow, Labour)
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I am giving my time to Deputy Arthur Spring.

Ann Phelan (Carlow-Kilkenny, Labour)
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I am doing the same.

Arthur Spring (Kerry North-West Limerick, Labour)
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Such blithe unawareness of considerations other than commercial interests and short-term commercial games is totally inappropriate for Mr. Boucher. It is incumbent on us as public representatives to exercise our 15% shareholding and send a message to Bank of Ireland and every other licensed institution in the country that the consequences of reckless behaviour or banking methods not commercially viable or prudent will be that the people concerned will be-----

Martin Ferris (Kerry North-West Limerick, Sinn Fein)
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Sacked.

Arthur Spring (Kerry North-West Limerick, Labour)
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Some people hold the view that they should be sacked. They should not be kept in a position where they are compensated in a way that is far in excess of what anybody else in society is being paid. As a former employee of banking institutions, including Bank of Ireland, I can tell the Minister of State that many of my former colleagues are looking at the CEO of Bank of Ireland and Mr. Kane who lost bonuses in the United Kingdom because of the way he had conducted himself and is now in a position of authority in Bank of Ireland as a director. These former colleagues and people working at the front desks of the banks face losing their jobs and are concerned, as they have massive debts. They look at Mr. Boucher and his ilk and say he is not aware of what is morally and financially correct. I urge the Minister for Finance, Deputy Michael Noonan, to tomorrow morning use the 15% shareholding on behalf of the people. We are public representatives and the public does not want to see bankers walking out with golden sunset cheques in their back pockets.

Brian Hayes (Dublin South West, Fine Gael)
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I fully understand the frustration of my colleagues concerning this issue. The firm intent of the Government is to make sure the new banking model that will be operated in this country will be sustainable and responsive to the needs of the economy. That is clear. The taxpayer has put enormous funds into the banks and it is crucially important that they are the engines of growth in the economy. That requires significant cultural change in the model which virtually collapsed the country.

It would be wrong of anyone to describe this as the Minister's position. It is the Government's position, as is well known and clear, following the publication of the Mercer report. We expect to receive from the covered institutions by the end of April very clear plans for how they will reduce their cost base by somewhere between 6% and 10%. It will be a matter for the banks to bring forward these plans in a circumstance where significant de-leveraging has already occurred within the banking system following the announcement we made in March 2011 on entering government.

It is appropriate that the greater reductions in salary would be at the top rather than the bottom, but we will wait and see what the banks will produce by the end of April. Government policy, endorsed by all members of the Government, is that each of the institutions must produce a plan by the end of April. The key task that we face is to return the banking system to profitability. We are determined to do this to ensure we get our money back as taxpayers.

While I understand the deep frustration of colleagues an know this to be the majority view in the country, we have also negotiated as part of our EU Presidency the CRD IV directive which is vitally important because it places significant limits on the entire bankers' bonus and pay culture that was at the rotten heart of the European banking system for the past decade or so. That is a significant achievement of the Government and our Presidency. The banks will operate under the directive when they return to profitability.