Ir­ish bank chiefs at lower end of pay scale among Euro­pean peers

AIB and Per­ma­nent TSB chief ex­ec­u­tives are among the low­est paid

The Irish Times - Business - - BUSINESS NEWS - Fiona Red­dan Anal­y­sis

The chief ex­ec­u­tives of AIB and Per­ma­nent TSB are among the low­est-paid com­pared with their Euro­pean peers, ac­cord­ing to an anal­y­sis of re­mu­ner­a­tion among 20 banks of sim­i­lar size by The Ir­ish Times.

This re­flects the ban on bonuses by the Gov­ern­ment in banks bailed out by the State and a salary cap of €500,000 at those lenders.

In terms of to­tal re­mu­ner­a­tion, PTSB’s chief ex­ec­u­tive Jeremy Mas­d­ing re­ceived the low­est, at €499,000, just €1,000 be­hind Marco Morelli, who heads Banca Monte dei Paschi di Siena in Italy.

In terms of salary, how­ever, Mr Mas­d­ing was not the worst paid. His salary of €424,000 was higher than the €387,702 paid to Paulo José de Ribeiro Moita de Macedo, the head of Por­tuguese lender Caixa Geral de Depósi­tos, which is more than four times the size of PTSB with as­sets of €91.5 bil­lion. How­ever, other re­mu­ner­a­tion plumps out his pack­age to €527,905, putting him ahead of Mr Mas­d­ing in over­all terms.

AIB chief ex­ec­u­tive Bernard Byrne is next in the list with a salary of €500,000 and to­tal re­mu­ner­a­tion of €600,000.

The high­est-paid ex­ec­u­tive in the peer group was Roe­land Baan, of Fin­land’s OP Fi­nan­cial Group, with to­tal re­mu­ner­a­tion of €4.1 mil­lion, and Al­berto Ni­cola Nagel of Italy’s Me­diobanca at just over €4 mil­lion. OP has to­tal as­sets of €142 bil­lion, mak­ing it slightly big­ger than Bank of Ire­land.

Bank of Ire­land boss Francesca McDon­agh is the high­est-paid ex­ec­u­tive at a State-in­volved bank here, with re­mu­ner­a­tion of €952,000.

Ir­ish man David Duffy, a for­mer chief ex­ec­u­tive of AIB and now the head of the CYBG group in the UK, is next in the list with to­tal re­mu­ner­a­tion of €2.3 mil­lion, in­clud­ing a salary of just over €1.1 mil­lion.

Bonus ban

Our anal­y­sis ex­am­ines the salaries and to­tal re­mu­ner­a­tion paid to chief ex­ec­u­tives of 20 lead­ing banks across Europe, which would be con­sid­ered peers of AIB, Bank of Ire­land and Per­ma­nent TSB based on the level of as­sets held on their bal­ance sheets (rang­ing from €22 bil­lion to €144 bil­lion). The pay cap and ban on bonuses has been cited in bank­ing cir­cles as the reasons why two se­nior AIB ex­ec­u­tives have an­nounced their de­par­tures in re­cent times.

AIB’s chief fi­nan­cial of­fi­cer, Mark Bourke, who had to­tal pay of €564,000 last year, is mov­ing to Por­tuguese up­start Novo Banco, while Mr Byrne is mov­ing to Ir­ish stock­bro­ker Davy. AIB chair­man Richard Pym re­cently said pay re­stric­tions for bailed-out banks had turned AIB into a “train­ing ground” for bankers who then move to higher-paid roles within the fi­nan­cial sec­tor.

An ab­sence of bonus pay­ments is one of the reasons why Ir­ish bankers earn less than their coun­ter­parts in sim­i­lar-sized lenders in Europe. An ef­fec­tive 89 per cent spe­cial rate of tax on bonuses rate was in­tro­duced in 2011. Fig­ures from Rev­enue show not one banker re­ceived a bonus be­tween 2012 and 2016.

In April, Min­is­ter for Fi­nance Paschal Dono­hoe an­nounced plans to ap­point out­side con­sul­tants to re­port back to him by the end of the year on com­pen­sa­tion in the in­dus­try, say­ing it was ap­pro­pri­ate to do so as some overseas firms seek to move ac­tiv­i­ties to Ire­land from Lon­don as they plan for Brexit – in­creas­ing com­pe­ti­tion for staff. This re­port is be­ing car­ried out by Korn Ferry. In the same month Mr Dono­hoe voted against a res­o­lu­tion at AIB’s an­nual gen­eral meet­ing that sought to rein­tro­duce bonuses at the lender for up to 100 top ex­ec­u­tives from next year.

Mr Dono­hoe ab­stained from a Bank of Ire­land re­mu­ner­a­tion res­o­lu­tion about the same time, which gave the bank the im­pri­matur to en­gage with ma­jor share­hold­ers on “the adop­tion of an ap­pro­pri­ate in­cen­tive scheme” in the fu­ture.

Ir­ish bankers are not the only ones to be sub­jected to a pay cap, which was in­tro­duced here in 2009. AIB re­mains 71 per cent owned by the State, while tax­pay­ers have 75 per cent own­er­ship of PTSB and 14 per cent of Bank of Ire­land.

Not known

Salary fig­ures are not known for the chief ex­ec­u­tives of other banks op­er­at­ing in Ire­land, such as Wim Ver­braeken of Bel­gian bank KBC, and Jane Howard, newly ap­pointed to lead Ul­ster Bank, which is part of Royal Bank of Scotland. One of her pre­de­ces­sors, Jim Brown, was once the high­est-paid banker in Ire­land, achiev­ing to­tal pay of €1.63 mil­lion in 2014. Ital­ian lender Banca Monte dei Paschi di Siena, for ex­am­ple, was bailed out by the state in 2017. With a 68 per cent stake in the in­sti­tu­tion, the Ital­ian gov­ern­ment im­posed a pay cap of €500,000 on chief ex­ec­u­tive Marco Morelli last year.

Jo­hannes-Jörg Riegler, chief ex­ec­u­tive of Bay­erische LB, Ger­many’s sec­ond largest state-owned Lan­des­bank, started at the bank with a salary capped at €500,000. It has since stretched to €750,000, how­ever, and Ger­man news­pa­per Han­dels­blatt has re­ported that he would like this dou­bled when his con­tract is up for re­newal in Fe­bru­ary 2019. If he achieves this, it would put him far ahead of Mr Mas­d­ing at PTSB, even though the two banks are of sim­i­lar size, with as­sets of about €23 bil­lion.

Leeds Build­ing So­ci­ety chief ex­ec­u­tive Peter Hill is set to step down from his “dream job” in Fe­bru­ary. In spite of be­ing of a sim­i­lar size to PTSB, with as­sets of €22 bil­lion, Mr Hill earned the equiv­a­lent of €817,483 last year.

Ital­ian lender UBI Banca is the third-largest Ital­ian com­mer­cial bank­ing group in terms of mar­ket cap­i­tal­i­sa­tion. It is of a sim­i­lar size to Bank of Ire­land, with as­sets of €127 bil­lion, but its chief ex­ec­u­tive, Vic­tor Mas­siah, was paid a salary of more than €1.2 mil­lion in 2017, and to­tal re­mu­ner­a­tion of close to €1.5 mil­lion.

BoI boss Francesca McDon­agh is the high­est paid ex­ec­u­tive at a State-in­volved bank

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