Record fines boost Central Bank profits by 59%

A record amount in fines imposed on financial firms and individuals by the Central Bank in 2021 contributed to its profits surging by 59 per cent to €1.32 billion last year. The regulator’s annual report reveals that, as a result, a dividend of €1.067 billion is payable to the exchequer.

In the report, which has been laid before the Oireachtas, the bank partly credits the higher profits to a rise in “other net income” from €201 million to €264 million due to increases in financial regulation monetary penalties and financial regulation industry funding levy income. Monetary penalty income multiplied almost threefold from €24.68 million to €67 million — which the bank says is the highest amount imposed in a single year to date. Income from the funding levy rose from €170 million to €185 million.

Another major contributor to the profits was the Central Bank’s net realised gains from financial operations last year, which doubled to €1.27 billion. Overall net income was 43.45 per cent higher at €1.67 billion while expenses rose only marginally from €339.8 million to €356.1 million.

The bank’s governor, Gabriel Makhlouf, saw his pay rise from €288,220 to €293,257. The report states that Mr Makhlouf also receives a UK public service pension. The salary for the deputy governor of prudential regulation, Ed Sibley — who is leaving the regulator for a role with EY Ireland later this year — was €255,006 compared to €250,630 for 2020. Sharon Donnery, the other deputy governor, was paid the same. The three officials were among 12 Central Bank employees who were paid more than €190,000 last year. Another 40 staff received pay of between €150,000 and €190,000 with another 250 earning €100,000-€150,000 last year. In total, 302 staff earned over €100,000; this compares to 266 in 2020. The report discloses that pay to key management personnel in 2021 was €11.49 million compared to €10.85 million in 2020.

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Numbers employed by the bank were broadly unchanged at 2,110. Of those, 977 were employed in financial regulation. Staff costs increased almost 11 per cent to €258 million from €233 million.

The bank spent just under €1 million more last year on “consultancy” at €7.4 million, with legal advice accounting for €1.33 million. The largest component of consultants’ pay was in the area of IT, at €2.32 million. Legal fees, related to 17 separate cases initiated or taken against the Central Bank last year, totalled €1.7 million.

The bank’s gold reserves stood at €492.8 million at year end — a 65 per cent increase over the 12 months. A note attached to the accounts says the increase was due to purchases of gold as part of a long-term investment strategy and the change in the market value of gold holdings over the year.