Minister warns of ‘unpalatable’ pay cuts in banks

Minister for Finance Michael Noonan has warned bank employees will face "some unpalatable measures'' in pay savings.

He said the cost bases of the banks must be reduced and remuneration costs must come down. “While it would not be appropriate or realistic to specify a timeframe for the savings to be delivered, it is clear that the timely delivery of such savings is critical.’’

Mr Noonan said there were ongoing discussions at three banks – AIB, Bank of Ireland and Permanent TSB – in response to the Government's decision that they come up with plans on achieving savings of 6 to 10 per cent of total remuneration costs.

He said he was not prescriptive in how the target was to be achieved, respecting the banks’ differing levels of State ownership and paths to profitability.

His abiding mantra, he added, had been to insist that normal industrial relations protocols and consultation procedures be observed by all participants. “I am anxious, therefore, that all parties to these discussions are afforded the necessary space and time to conduct these critical negotiations.’’

Fianna Fáil finance spokesman Michael McGrath said those at the top should lead by example and the impact of the reduction should be graduated accordingly.

Sinn Féin finance spokesman Pearse Doherty said that at AIB and Bank of Ireland, 257 individuals were on remuneration packages of more than €200,000, while some 2,500 were earning more than €100,000. He asked if there was a proposal for high earners to take a reduction in their base salaries.

Mr Noonan said he was interested in reducing the cost base of the banks for reasons everyone was aware.

“I am not as interested in retribution or vengeance as Deputy Pearse Doherty,’’ he added. “That is a different objective.’’