As the tracker mortgage scandal continues to bubble, Maurice Crowley, the interim chief executive of Banking & Payments Federation Ireland, has told The Irish Times that any future bank bonus schemes would have to be linked to "measures around culture" and how banks are "really looking after their customers".
The tracker scandal highlights everything that is wrong with the culture within Irish banking, and has cost lenders about €1 billion to date.
The Central Bank of Ireland confirmed on Monday that banks had acknowledged another 1,400 cases where borrowers were either wrongly denied their right to a cheap mortgage that tracked the European Central Bank benchmark rate, or had been put on an incorrect rate.
That’s brought the total figure of customers impacted by the scandal to almost 40,000. And there are bound to be additional cases before the Central Bank publishes its final report on the debacle in the coming months, more than three years after it ordered lenders to look through their books for cases of overcharging.
This scandal hasn’t stopped the State’s bailed-out banks arguing that they should be allowed to return to paying executive bonuses, which have effectively been banned since the onset of the financial crisis. The argument is that banks are losing top talent to rivals who are not subject to the same caps.
The Government asked global recruitment consultancy Korn Ferry last year to review remuneration across the sector. It is understood to have indicated in initial drafts that the status quo is unsustainable.
Still, Minister for Finance Paschal Donohoe said two weeks ago that he has no plans to reintroduce bonuses. He probably knows all too well that this is an impossible sell to the public for a minority government.
Bankers know that any return to bonuses will be heavily stock-based, set against measures of long-term shareholder value, and include clawbacks if they or their institutions misbehave.
Finding ways to measure changes in either banking culture, or the way they look after their customers though will be the tricky part.
