Louise O'Reilly (Dublin Fingal, Sinn Fein)
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111. To ask the Minister for Finance his plans with regards to banking remuneration policy; his position with respect to the recommendation of the finance committee in its report on banking that the current restrictions on banking remuneration should remain in place; and if he will make a statement on the matter. [3102/23]

Pearse Doherty (Donegal, Sinn Fein)
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136. To ask the Minister for Finance his views on banking remuneration policy; if he agrees with the recommendation of the Oireachtas finance committee in its report on banking that the current restrictions on banking remuneration, including the €500,000 cap on annual pay, should remain in place; and if he will make a statement on the matter. [3147/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 111 and 136 together.

Government policy on banking remuneration had remained unchanged since the financial crisis, which was over a decade ago. Extensive restrictions were in place and they affected c. 20,000 workers across the three banks in which the State has/had a shareholding, from the most junior staff to the most senior ranks as variable pay, including bonuses and many other benefits, could not be paid. These restrictions created recruitment and retention problems for AIB, Bank of Ireland and Permanent TSB.

The skill set required in the banking sector is evolving with the greatest demand for staff now in areas such as IT, cyber, risk management, legal and compliance. These skills are in demand right across the economy and so the banks are competing for this talent against companies who have more flexible and attractive remuneration structures.

In the case of Bank of Ireland, the State is no longer a shareholder in the bank but the remuneration restrictions remained in effect. Bank of Ireland repaid all its State aid some time ago and the taxpayer has recovered more money from its support for the bank than it invested. The remuneration restrictions were anti-competitive and unsustainable in an environment where the State no longer has a shareholding in the bank. Therefore, in November 2022, all contractual pay restrictions at Bank of Ireland were removed by the Minister for Finance, with the exception of variable pay awards above €20,000 per annum.

The State continues to be majority shareholder in AIB (c. 57%) and Permanent TSB (c. 62%). While restrictions around variable pay up to €20,000 and fringe benefits have also been removed for AIB and PTSB, both banks will continue to abide by the total compensation cap of €500,000 per annum that is currently in place. This additional restriction relative to Bank of Ireland will remain in place but will be reviewed at the appropriate time, which has yet to be decided upon and ultimately will be a matter for the Government.

It continues to be this Government’s belief that banking in the main is an activity that should be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for more productive purposes.