Belfast Telegraph

Tuesday 2 September 2014

Bailed-out banks told to cut wages

Finance Minister Michael Noonan has directed four institutions to make plans to slash remuneration costs

Bailed-out banks have been warned to cut their pay bills by up to 10%.

Finance Minister Michael Noonan has directed four institutions to make plans to slash remuneration costs by hitting their payroll and pension benefits.

He made the order at the publication of a study into pay at Irish banks by consultants Mercer, which revealed total remuneration for employees at the former Anglo Irish Bank actually rose by 1% over the last four years.

But they fell by between 6% and 11% at Bank of Ireland, Allied Irish Banks (AIB) and Permanent TSB between the end of 2008 and late 2012, mainly due to reduced headcount and the withdrawal of bonuses.

Around 64 billion euro of taxpayers' money has been ploughed into the four institutions since the night of the bank guarantee in September 2008.

Mr Noonan said the review shows that remuneration levels in the covered institutions are behind levels in the financial services industry generally.

"However, the Government has taken the decision 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," he said.

"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.

"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."

The minister said he acknowledges the sacrifices and changes made by bank employees to date without major industrial unrest. But he warned he will be directing the banks to make savings of between 6% and 10% of total remuneration costs by cutting both payroll and pension benefits and by creating new working arrangements and structures that deliver efficiency gains.

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