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Govt to banks: Cut payroll costs 10pc

Tuesday, March 12 16:25:44

The Government today decided to publish the Mercer Review of pay in the covered banks and has decided to direct the banks to come up with plans to deliver savings of 6pc to 10pc of total remuneration costs.

This has to be done through reductions in payroll and pension benefits, new working arrangements and structures that deliver efficiency gains.

Average total remuneration for continuing employees has fallen by a range of 6pc to 11pc at Bank of Ireland, Allied Irish Banks, and Permanent TSB but it had risen 1pc at IBRC, the Mercer Report found.

Senior Executive level (and above) salaries are generally behind the market as compared to quoted Irish companies and Mercer European Financial Services survey and significantly behind when incentives are taken into account, the Mercer Report found.

Management level salaries are in line with the Irish financial services market but somewhat ahead of 'Other Industry'. Total remuneration for this cadre of employees is somewhat behind the Irish financial services market while ahead of 'Other Industry', it found.

Lower to middle level grades salaries are typically in line with the financial services market and somewhat ahead of 'Other Industry'.

"I wish to thank Mercer for undertaking this assignment and the banks for their co-operation in its preparation. We now have the factual position on bankers' remuneration from end 2008 to late 2012 placed in context and this will enable a true evidenced based policy to be developed and implemented in consultation with the various stakeholders," Finance Minister, Michael Noonan said.

The report found that there was a significant reduction in total remuneration costs at bank level between end 2008 and late 2012, mainly due to reduced headcount and the withdrawal of incentives (bonuses).