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Tuesday 7 February 2023 Dublin: 10°C Acting Central Bank governor Sharon Donnery.
# Banks
Acting Central Bank governor says bankers' pay caps 'may limit the pool of candidates for senior positions'
The finance minister is currently considering a report which reviewed whether bankers’ pay should be increased.

ACTING GOVERNOR OF the Central Bank Sharon Donnery has doubled down on comments made by her predecessor that the bankers’ pay cap may prove difficult in staff retention. 

In a recent letter, the former governor Philip Lane, said bankers’ bonuses should be re-introduced. 

AIB’s new boss Colin Hunt has also said that the ban on bonuses should be lifted as employees are being enticed to competitors. 

The pay cap was introduced after the recession to bank staff employed by banks in which the State is a shareholder. 

“I think since the crisis – and it’s Governor Lane’s letter which we’ve published – we’ve a very different regulatory environment now in the requirements around pay and bonuses or other incentives,” said Donnery.

“The operation of the caps in Ireland is a matter for the minister in the context of his slareholding in the banks.

“I think we were clear in our letter that, yes, if there are caps in place, it may limit the pool of candidates for senior positions. But having said that, the banks have still managed to recruit people.

“Our letter is clear in saying though that there are some concerns in particular areas of risk, compliance, IT and so on, where there was big demand for people, and that it may be the case that the banks are losing people they need. After that there is a difference between variable pay and other incentives,” she said.

She added:

“I think they would have to be thought carefully about, particularly in the context of the regulatory framework.”

Her comments come as Finance Minister Paschal Donohoe considers a report which reviewed and made recommendations about whether the ban on bankers’ bonuses should be lifted.

In relation to tax revenue, and in particular, corporation taxes, the acting governor said: 

A clear strategy guiding the use of unanticipated revenue inflows should be promptly established.

Moreover, the reduction of public debt ought to remain a key priority given its very high level. To somewhat labour the analogy, we must ‘fix the roof while the sun is shining

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