Honohan takes pay cuts as Central Bank posts €1.2bn profit

CENTRAL BANK governor Patrick Honohan took a 15 per cent paycut last year, handing back €41,740 of his salary and leaving himself with €234,584, according to the bank’s annual report for 2011.

Mr Honohan will “gift” a total of €63,324 to the Minister for Finance after agreeing to take a further pay cut for 2012, leaving him with a salary for the year of €213,000.

A Central Bank spokesman said the governor had voluntarily decided to take a pay cut.

Mr Honohan’s deputy, Matthew Elderfield, who is in charge of financial regulation at the bank, was paid a salary of €340,000 last year.

Stefan Gerlach, the deputy governor in charge of central banking, was paid €83,333 for the final three months of the year after being appointed on September 1st last.

The Central Bank took a provision of €300 million to cover potential losses on “securities held for monetary policy purposes”.

Mr Honohan said the sizeable provision was “pretty sensible” given the current risky environment facing central banks.

“The estimation of the impairment charge is subject to considerable uncertainty, which has increased in the current economic environment.

“It is sensitive to factors such as the market perception of debt sustainability,” said the bank in the annual report.

The Central Bank made a profit of more than €1.2 billion compared with €840 million in 2010, and is paying surplus income of €958 million to the exchequer, up from €671 million in 2010.

The value of assets at the bank fell in 2011, to €173 billion from €204.5 billion a year earlier.

Staff levels increased by 12 per cent to 1,372 employees in 2010. The bank has approval to increase employee numbers to 1,559.

Salaries, benefits and pensions paid amounted to €103 million in 2011, an increase of 19 per cent.

Mr Honohan declined to disclose the level of Greek bonds held by the Central Bank or to answer questions on the potential effect of Greece exiting the euro zone.

In response to a question about problems at the Spanish banks, Mr Honohan said it was a possibility that bailing out European banks directly from the EU bailout funds as he has proposed for euro zone banks could be adopted “to meet the evolving circumstances”.

The governor said a deal on the Anglo Irish Bank promissory notes would be “valuable to have a longer-term solution” and could help financial stability overall.

Mr Elderfield said the failure of investment company Custom House Capital was a “frustrating experience” given how the bank, auditors and investors who carried out due diligence on the firm were “unable to spot the problems”.

Mr Honohan said no deal had been finalised for the Central Bank to buy the Dublin docklands skeletal building that was to be Anglo’s new head office.

He described the building as “a monument for things that we are still recovering from”.