Ireland picks cheeky moment to lift bank bonus cap

Ireland's Minister for Finance and President of the Eurogroup Paschal Donohoe looks on during the Eurozone finance ministers meeting in Brussels, Belgium, November 7, 2022. REUTERS/Yves Herman

LONDON, Nov 30 (Reuters Breakingviews) - Ireland’s plan to lift a cap on bankers’ bonuses looks ill-timed. On Tuesday, Finance Minister Paschal Donohoe said Dublin will lift a 500,000 euro crisis-era cap on annual executive salaries and allow bonuses of up to 20,000 euros for bank workers. Limits on pay were introduced after 2008 when Irish taxpayers bailed out the country’s largest lenders. However, Irish bank bosses have long argued salary constraints made it difficult to retain top talent.

Dublin’s centre-right government may reckon it has timed the change well. Ireland has experienced a banking exodus in recent years, with Belgian lender KBC (KBC.BR) and Britain’s NatWest (NWG.L) quitting retail lending. The remaining big bank duopoly of AIB (AIBG.I) and Bank of Ireland (BIRG.I) means a customer backlash is unlikely as there is little alternative. Still, championing higher pay for bankers is a gutsy move in the middle of a cost-of-living crisis. Moreover, AIB is still majority-owned by the state. Anger over higher banker pay could also be a gift to left-leaning Sinn Féin, which supports the caps and is tipped to win an election in 2025. The fatter paychecks may be fleeting. (By Aimee Donnellan)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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