The Minister for Finance is expected to ask the Cabinet tomorrow to approve a plan that would see restrictions on salary and variable pay for bankers working at lenders which were bailed out by the State eased.
It is understood that the proposals include allowing banks to pay bonuses of up to €20,000 to their staff.
Restrictions on non-pay benefits, such as private health insurance and childcare, would also be lifted.
If approved the plans would also see the current salary cap of €500,000 removed from Bank of Ireland, which is no longer partially State owned.
While the other bailed out banks which the State still owns a majority stake in, AIB and Permanent TSB, would have the same salary cap lifted when the State’s shareholding reduces to a specified appropriate level, it is understood.
Remuneration restrictions were put in place on the banks in the wake of the financial crash over ten years ago, as a result of what subsequently emerged about the actions and practices of senior bankers across the industry.
However, in recent years the banks impacted have been lobbying for them to be eased or removed, as they claimed it was putting them at a competitive disadvantage against competitors inside the sector and other companies outside it who are competing for similar talent.
Unions had also joined the call, as they claimed ordinary frontline staff were also suffering as a result of the restrictions on variable pay and other benefits.
Under the current restrictions, salaries are limited to €500,000 a year, although the current and former Bank of Ireland chief executives had an exemption which allowed them to earn close to €1m.
There is also a special 89% super tax rate which is imposed on banker bonuses.
But across Europe there has been a relaxation of such measures as the banking sector recovered.
A spokesperson for the Department of Finance declined to comment on the issue.
The proposals are likely to prove politically sensitive though, given the focus on the rising cost of living.
However, it is understood that all three of the coalition leaders have agreed to them.
The move comes just weeks before Minister for Finance Paschal Donohoe leaves that position to make way for Fianna Fáil’s Michael McGrath as part of the Government’s mid-point transition.
Tomorrow’s memo will go to Cabinet in the context of the completion of the banking review commissioned by the Minister for Finance.
It is also expected to include recommendations to legislate for access to cash services.
It is also understood to make proposals around removing barriers to competition in the sector.
Reacting to the news, Sinn Féin said reports that the restrictions on bankers’ pay look set to be eased are a kick in the teeth for struggling workers and families.
The party’s finance spokesman, Pearse Doherty, said the limits were put in place as a result of the “reckless actions of senior bankers”.
“Since then, we have witnessed the tracker mortgage scandal, with €270m in fines meted out to banks for the harm they inflicted on their customers,” he said.
“This year alone, AIB and Bank of Ireland were fined over €197m for regulatory breaches and actions that led to families losing their homes.”
“Harm was meted out even during the Tracker Mortgage Examination.”
He described the decision as tone deaf in the context of recent history and questioned the Minister for Finance’s priorities.
Proposals to allow banks pay bonuses of up to €20,000
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