Pay restrictions ‘hamper’ Central Bank’s ability to retain staff

Public sector pay restrictions will continue to hamper the Central Bank of Ireland's ability to retain key staff at a time when better conditions are on offer from the European Central Bank in Frankfurt, the deputy governor of the Central Bank of Ireland said in Dublin today.

Speaking at a conference on banking union hosted by the Banking and Payments Federation Ireland, Cyril Roux said the ECB has been successful in attracting "high quality staff" to the Single Supervisory Mechanism, which took over responsibility for regulating euro zone banks a year ago, with many staff being poached from national banking authorities, including the Central Bank of Ireland. He said 20 Irish Central Bank employees have joined the SSM.

“They have been attracted by the exciting challenge of working abroad, in helping establish the SSM, and the much better financial terms and employment conditions offered to them,” Mr Roux said. “A second wave of supervisors is expected to leave the Central Bank and other national competent authorities next year, as the ECB will be increasing its SSM headcount by 25 per cent.

“Combined with the familiar constraint of FEMPI [public sector pay legislation], this will bring further stresses to the bench strength of banking supervision in the Central Bank, and to the challenge of replenishing once more our ranks.”

Mr Roux’s comments come in the wake of the disclosure of controversial retention payments by the Central Bank to staff dating back to 2011. This is in spite of the government having introduced the FEMPI Act post the 2008 crash, giving it the power to curb public sector pay and ban bonuses.

The Central Bank did not seek the approval of Government for the controversial retention payments and said it has received legal advice to the effect that the payments comply with the FEMPI legislation. Some €234,176 has been paid by the Central Bank to certain staff over the past three years with 29 staff currently in receipt of these payments, which equate, on average, to 21 per cent of their salaries.