State cap on banker pay is starting to look outdated

Speaking of bankers, there is little room for misinterpreting the rules surrounding bank chief executive pay. Bank of Ireland chief executive Richie Boucher is retiring after nine years at the helm of the bank. His remuneration, at around €943,000 last year, was not covered by the State cap of €500,000 but his successor’s might be.

Boucher’s pay was agreed before the cap came into force.

The ridiculousness of this rule at this stage really came home during the week when it emerged that FBD chief executive Fiona Muldoon earned €900,000 last year running a financial services company with a market capitalisation of €273m. Boucher’s Bank of Ireland has a market cap of €7.8bn.

If the State’s 15pc shareholding can enforce the cap, despite Bank of Ireland having paid back all of the money it received from the State, then someone like Muldoon would be practically halving her earnings to take the job.

What sort of hit might an international banker be taking? It becomes all the more contentious when you see that AIB chief executive Bernard Byrne, overseeing one of the biggest bank IPOs in the world at the moment, is on €500,000 plus a pension top-up of €100,000.

His non-executive chairman, Richard Pym, earned €365,000 last year. The non-executive chairman of Bank of Ireland earned €490,000.

Most experts agree the banks began to get it hopelessly wrong on lending, wholesale funding, property, 100pc mortgages and executive pay, from about 2003 onwards. AIB chief executive Tom Mulcahy was paid €1.2m to run the bank in 2000 — 17 years ago.