Tue. Oct 19th, 2021

When one senior Irish banker working abroad is considering returning home, he runs into an insurmountable obstacle: his payment package.

“There was an occasion I looked forward to,” he said, asking not to give his name. But he would have to take a ‘very serious’ salary cut and ‘that was one of the reasons I refused’.

Since the biggest bailout in the eurozone more than a decade ago, Ireland’s three main street banks have been required by law to raise the salaries of top executives to € 500,000. Furthermore, the rules prevents approximately 23,000 staff, from the youngest to the oldest, from receiving bonuses or other benefits, including health insurance and childcare.

Well-paid bankers who complain that they can earn only half a million euros a year may not arouse much sympathy among workers who lost their jobs during the Covid-19 pandemic.

But the banking industry in Ireland has said that the problems posed by one of the EU’s most restrictive compensation regimes are ‘more acute than ever’, both in the mid-level and in the C-suite, and that it affects the ability of AIB , Bank of Ireland and Permanent TSB to innovate and ultimately deliver for the government that still has significant interests.

“It’s one of the biggest pressure points to get talent,” said Brian Hayes, chief executive of the Banking and Payments Federation of Ireland. a report published with EY highlighting this as a major issue. ‘It’s like a brain drain, it’s putting enormous pressure on the [banking] model. ”

Within the industry, however, the message is clear: buy around.

Myles O’Grady, BoI’s CFO, became the latest to do just that this week. The announcement of its upcoming departure to Musgrave Group, which owns 11 brands, including supermarket giant SuperValu, comes two years after its predecessor, Andrew Keating, left for construction product company CRH.

Cut the numbers and it’s easy to see why. Keating made € 468,000 in his final year at the bank before becoming group director of finance at CRH. The chief financial officer of the company Earn $ 3.2 Million last year. O’Brien’s new salary is not known, but industry insiders said it was a safe bet he would earn more than the € 531,000 he took home, including his pension, last year.

“I have just placed a CFO of 1.5 million euros and a head of human resources at 1 million euros,” said a headhunter, adding that the latter had started in banking.

Not everyone quits banking completely. Some are being dragged along by better-paying foreign financial institutions, which are not subject to the same restrictions, something that Boances CEO Francesca McDonagh said domestic banks have a competitive disadvantage.

Exceptions have been made in the past, such as for McDonagh herself when she joined BoI at HSBC in 2017, but people familiar with the process say it is rare and that it convinces Ireland’s Ministry of Finance that you are looking for the world. went to alternative options. That’s part of the reason, according to the European Banking Authority, Ireland was home to just 34 bankers, in both Irish and international lenders, who paid more than € 1 million in 2019, at 3,519 in the UK.

In 2018, when the chief financial officer and CEO of the AIB resigned within two months in a row – the first to a Portuguese borrower, the latter at a leading stockbroker in Ireland – Richard Richard Pym complained that his bank had a “training ground for competitors ”.

“If you told a chief operating officer at AIB or Bank of Ireland that they could earn twice as much as the chief operating officer of a foreign bank in Dublin, you would lose people,” the senior banker said.

For recruiters looking for top-class bosses to fill the departure of executives’ shoes, the pay cuts, in addition to the demanding central bank suitability and probability assessments, which may include months of forensic investigation, can mean a diminishing and not very diverse pool. .

“Customers really demand what they want, but it can be like looking for Formula One drivers in a parking lot full of skateboards,” says the senior headhunter, who calls the payment restrictions “a complete and complete barrier” in the industry.

According to Hayes, the problem is not only at the very top, but also in the middle class and among graduates, many of whom transfer to other employers of financial services. Ireland not only plays host to major US technology companies, such as Amazon, Apple and Google, but also fintechs such as Stripe.

Hayes said the policy could have a setback: the government still owns 12 percent of BoI, 71 percent of AIB and 75 percent of PTSD, so staying competitive maximizes state investment. “The future viability, performance and health of the banks really depends on them being able to make investments and hire skills,” he said.

According to the BPFI and EY report, a fifth of the recruitment in the three retail banks over the past three years has been technology and digitalisation, as old banks strive to keep up with finer peers.

The trend is expected to continue, but whatever the sector needs, the government is unlikely to turn its arm.

“[Bank bosses] run glorified credit unions, what do they expect to be paid? ”Pulls up a former official, referring to local savings and alliances.

And with the left-wing nationalist party Sinn Féin electing the election preferences for Irish elections by 2025, top executives see little change on the horizon.

“It’s going to get worse soon when Sinn Féin comes in,” the headhunter said. “They will care even less.”

Additional post by Laura Noonan in London

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