Minister for Finance Paschal Donohue has announced the removal of the pay cap on maximum pay for AIB and PTSB.
The Government removed a €500,000 pay cap from Bank of Ireland after completing a review of the sector’s pay restrictions shortly after the bank returned to full private ownership in 2022.
It comes after the State sold its remaining shares in AIB today.
The State sold a 2.06% stake in AIB at a price of €6.94 per share. This will generate about €305.3m upon settlement and brings to €19.8 billion the total amount returned to the State to date from its investment in AIB.
Minister Paschal Donohoe said he was announcing a further normalisation of the relationship between the State and the domestic banking system, which means the removal of certain crisis-era measures which continue to be in place today, including certain restrictions pertaining to remuneration.
“These restrictions were introduced by way of contract with the banks recapitalised by the State following the financial crisis. When introduced, these contractual restrictions had no expiry date or sunset clause,” the Minister said.
“Following the 2022 Retail Banking Review, changes to remuneration restrictions were made for all three banks to allow for variable pay of up to €20,000 per employee per annum. This is consistent with the limit set by the 89% super-tax, which remains in place. The change also allowed for the provision of standard non-pay benefits for all employees,” he said.
He said the maximum pay cap of €500,000 for an individual was removed for Bank of Ireland at the time of the 2022 Retail Banking Review but it was retained for AIB and PTSB.
“This maximum pay cap will now also be removed for both AIB and PTSB. This ensures a level playing field between Bank of Ireland and AIB which is consistent with the shareholding position,” he said.
“Removing the salary cap for PTSB at this juncture is to ensure that it is not put at a competitive disadvantage,” he added.
Earlier, the Minister said the sale of AIB shares was well received with significant demand from a large number of high quality international institutional investors.
“This accelerated bookbuild (ABB) transaction represents our seventh such disposal in AIB and will reduce the State’s directed shareholding in the bank to zero. This is an important milestone in delivering on the Government’s policy of returning the banking sector to private ownership,” he added.
He said that on an overall basis, based off current market prices, the State is about €0.6 billion above break-even on its €29.4 billion investment in AIB, Bank of Ireland and PTSB.
But the failed Irish Nationwide Building Society and the former Anglo Irish Bank has also cost the State €34.5 billion.
AIB group chief executive Colin Hunt said that reaching this milestone is a significant day for the bank.
“AIB profoundly regrets that the institution had to be rescued by the State almost two decades ago and owes an immense debt of gratitude to Irish taxpayers for the support provided during that challenging time,” Colin Hunt said.
“Since then, our focus has been on rebuilding trust, repaying the State and continuing to support our customers, communities and the wider economy,” he added.
The CEO said the group has undergone significant transformation and through the implementation of its proven strategy, it is well-positioned to continue generating value for all its stakeholders over the medium-term.
“With our market-leading customer franchise, resilient revenues and a strong capital position, we remain confident in the strong fundamentals of our business and our ability to play a positive role in the Irish economy, helping to build a more sustainable future for our customers while delivering sustainable returns for our shareholders,” the CEO added.
Today’s sale will leave Ireland with a 57% stake in the smaller PTSB to sell to complete its long withdrawal from the sector. It sold the last of its shares in Bank of Ireland in 2022.
AIB shares were lower in Dublin trade today.
