Banks 'should be named and shamed over pay perks'
Banks that continue to link wage perks to inappropriate risk taking should be named and shamed after a damning review found little change in pay policies.
The Central Bank said just one bank had made progress in reforming how it rewards its executives.
While refusing to name the banks, it warned past mistakes risked being repeated unless action is taken.
But Fine Gael and the Irish Small and Medium Enterprises Association (ISME) said lenders who fail to change should be outed.
Mark Fielding, ISME chief executive, said: “They should be named and shamed.
“We’ve gone way past the cloak of secrecy over these things.”
His sentiments were echoed by Fine Gael’s deputy finance spokesman Brian Hayes.
“I think they should name the banks,” he said.
“We own these banks effectively. So why should we treat them any differently to public authorities?”
The review of the state’s banks and building societies was carried out in September and October.
It found:
:: Little evidence that banks made a self-conscious link between pay structures and appetite for risk.
:: The governance and oversight of remuneration practices is poor.
:: In the majority of banks, procedures to determine remuneration are not clear, well documented or transparent.
The Central Bank, which wrote to the chief executives of the institutions, said there needed to be tougher scrutiny of senior executives’ pay to ensure it is aligned with the bank’s ability to take risks.
Jonathan McMahon, head of financial institutions supervision, said he was discouraged by the findings.
“We conducted this review to determine whether banks have ceased those remuneration practices which fostered inappropriate risk taking and inadequate risk management in the 2000s,” Mr McMahon said.
“While the majority of banks have started to reform their remuneration policies and practices, the balance of our findings is discouraging, with only one bank having taken an obvious lead.
“If a bank is not employing the right financial incentives, it is not managing its risks – it’s as simple as that.”
Fine Gael said the review revealed executive pay polices along with high remuneration and bonus packages are not being tackled.
Damien English, banking spokesman, said: “Irish taxpayers will be outraged that, once again, the Government is turning a blind eye to fat cat bankers’ pay while simultaneously hammering those on the minimum wage and social welfare.
“Those at the top of the banks who were responsible for reckless decisions are, in many cases, still in place but, more than two years after the banking crisis came to the fore, the Central Bank has now confirmed that pay policies at the banks have not been changed substantially.”
