The government will loosen the strict caps on bankers’ pay and bonuses imposed after the financial crisis, which lenders say has hurt their ability to attract and retain staff.
The proposals came after a review of the retail banking sector that the government was forced to rescue during the financial crisis.
Under proposals, banks will be allowed to pay bonuses of up to €20,000 as well as other benefits such as health insurance — which until now have been banned.
In addition to the bonus payments, Bank of Ireland, the first of the banks to return fully to private ownership this year, is expected to be allowed to lift a €500,000 cap on executive pay.
AIB and Permanent TSB, rival lenders that are still majority state-owned following their rescue, will be allowed to abandon the pay cap once the state’s stake in them falls below a threshold to be set by the government.
The state holds 57% of AIB and 62.4% of PTSB.
The ditching of the rules is expected to be a welcome development for Bank of Ireland, which has been lobbying against them, although its new chief executive, Myles O’Grady, secured an exemption that allows him to be paid nearly €1m.
BoI and the other banks declined to comment until the cabinet had signed off on the measures.
Pearse Doherty, finance spokesman at Sinn Féin, which opinion polls suggest will lead the next government after elections due in early 2025, called the change “a kick in the teeth to struggling households”.
BoI was fined a record €100.5mn and AIB €96.7mn for refusing to give customers access to cheaper mortgages that tracked European Central Bank rates in an industry-wide scandal dating back almost two decades.