Written answers

Tuesday, 28 February 2017

Department of Finance

Banking Sector Remuneration

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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52. To ask the Minister for Finance his views regarding the incessant lobbying of representative groups for leading bankers to have pay rises and pay rise caps either raised or abolished; and if he will make a statement on the matter. [9984/17]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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At meetings between myself, officials and senior representatives of the banks late last year, at which a broad range of topics were discussed, the banks commented on the current remuneration restrictions, which apply to the banks which the State had to rescue, and the potential impact these restrictions have on recruitment and retention. In addition, there is some reference in the banks most recent annual reports in this regard. However, it would be unfair to characterise this as incessant lobbying.

In addition to the pay restrictions that are currently in place as part of Irish Government policy, it is important to acknowledge the wider European regulatory changes to bankers remuneration that have been implemented since the banking crisis.  This includes a number of changes to the framework that applies to bonus payments (including salaries and discretionary pension benefits) to staff of relevant institutions.  The aim of these changes is to prevent a re-emergence of the issues we have seen in the past of short-term targets being the focus of institutions due to the remuneration policies implemented for staff resulting in significant risk taking.   

The Capital Requirements Directive IV (CRD IV) introduced a remuneration framework to deal with excessive risk taking which applies to individuals within a relevant entity whose professional activities have a material impact on their risk profile, known as 'material risk takers'. These material risk takers include senior management, risk takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers.

The introduction of the framework in 2014 and enforced by the relevant competent authorities across Europe is designed to ensure the excessive risk taking culture and short term focus on targets seen prior to 2008 is not repeated.

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