THE FINANCIAL SERVICES Union (FSU) has said that any move to re-introduce bonuses for senior bankers “would not be acceptable” to staff and the general public if the Government’s new accountability regime for top executives isn’t in place beforehand.

After rescuing the main Irish banks from collapse during the financial crisis, the government effectively banned bonuses and capped pay for senior bankers.

But earlier this week, Bank of Ireland (BoI) chief executive Francesca McDonagh told RTÉ News that she would “encourage normalisation” of bonuses once the bank returns to private ownership.

The Government sold a small portion of its 14% stake in BoI on Tuesday after the lender posted better-than-expected interim results. The sale was part of a Government plan, announced by Minister for Finance Paschal Donohoe in June, to gradually exit the bailed-out bank by the end of the year.

McDonagh welcomed Donohoe’s strategy and told RTÉ, “We’d certainly encourage normalisation [of bonuses], particularly as we repay the taxpayer and we are returning to private ownership.”

She added that the bank would “operate within” European Banking Authority restrictions on bonuses if and when they are reintroduced.

But the FSU, which represents about 60% of the workforce in the bank, said the move would be unpopular if it occurs before the Government’s new accountability regime for senior figures at regulated financial firms isn’t operational.

In a statement, a spokesperson for the trade union told The Journal, “The FSU firmly believes that in the absence of Senior Executive Accountability Regime legislation being in place, that any move on executive remuneration in any bank would not be acceptable to staff, customers or the general public.”

Unveiling the Heads of Bill for the new regime last week, Donohoe said it could take another 12 to 18 months before the long-delayed piece of legislation will be enforceable by the Central Bank.

Positive results

Overall, the FSU said it welcomed BoI’s positive interim results, which showed the lender raking in pre-tax profits of €465 million in the first half of the year compared to a loss of €669 million for the same period in 2020.

Faced with the uncertainty of the pandemic, the lender moved to slash costs, announcing the loss of 1,700 jobs last year and the closure of 88 branches in the Republic and 25 in Northern Ireland.

“We look forward to the CEO of BoI making a statement on pay increases for the entire workforce in BoI, not just for the select few,” the FSU spokesperson added.

A BoI spokesperson told The Journal that the bank has no immediate plans to increase pay for all staff.

On the issue of returning the bank to private ownership, the FSU said it understands “the importance of a vibrant banking sector” in Ireland.

“The minister is committed to a Banking Forum on the future of banking — why not await the outcome of that review before divesting the state shareholding?

“We have sought a meeting with the minister.”