The Irish government has officially lifted the €500,000 salary cap on bankers’ pay, bringing an end to one of the most symbolic constraints imposed after the 2008 financial crisis. The decision, which follows the full privatisation of AIB this week, marks a significant shift in the country’s approach to executive compensation in the banking industry.
Finance Minister Paschal Donohoe confirmed the move, saying it would apply to both AIB and Permanent TSB (PTSB). Although the State still holds a 57% stake in PTSB, the government opted to lift the cap across both institutions to maintain a level playing field with Bank of Ireland, which was exempted from the restriction in 2022 after its return to private ownership.
The cap, introduced in the aftermath of the financial crash, was seen as a key measure to curb excess in the sector. But industry leaders have long argued that it hampered Irish banks’ ability to compete for top talent, particularly as international banks began offering more lucrative packages.
The removal has drawn mixed reactions. While welcomed by banking executives, it has stirred unease among members of the public who still recall the fallout from the financial collapse, which led to a €64 billion taxpayer-funded bailout and years of austerity.
Prior to the crash, Ireland’s top banking executives earned multi-million euro packages. Among them was Brian Goggin, former CEO of Bank of Ireland, whose salary peaked at nearly €4 million in 2006. David Drumm of Anglo Irish Bank, who was later imprisoned for his role in a €7.2 billion fraud, also earned millions during his tenure. Michael Fingleton of Irish Nationwide controversially paid himself a €1 million bonus in 2008—just before the society’s collapse.
Eugene Sheehy, former AIB chief executive, earned more than €2 million annually before retiring in 2009, later agreeing to halve his €500,000 pension following public outrage. Meanwhile, Denis Casey of Permanent TSB received a €4.57 million severance package in 2009, amid his bank’s links to controversial dealings with Anglo Irish.
Current CEO of AIB, Colin Hunt, has been earning €600,000 including pension contributions under the cap, but that figure is expected to rise significantly with the restriction now gone.
The shift signals a new phase for Irish banking, as institutions move away from state control. However, with memories of the crash still fresh, many will be watching closely to see whether the sector can balance executive reward with greater corporate responsibility.
