The government caps the pay of bank Chief Executives but not of their more junior colleagues, leading to AIB’s creation of a new post of “Managing Director”, presumably in an attempt to exploit the loophole. The comedy of errors continues.
Patrick Honohan warns that banks need to be able to offer competitive remuneration packages. But don’t Irish banks need to return to the much more staid banking practices of decades ago, and will have the regulators looking over their shoulders to ensure they do so? It is not clear to me that these institutions will require Goldman Sachs-type globetrotters as CEOs; I suspect there must be many people capable of performing these functions, whose opportunity costs would be well below the level of the cap.
On a tangentially related point, I see from yesterday’s Sunday Tribune that Maurice Manning, as President of the Irish Human Rights Commission, earns a higher salary than the Taoiseach. Much less responsibility, and this salary has to be well above Manning’s opportunity cost (as a former middle-ranking academic and senator). No global competition arguments apply to such political appointments. Definitely something wrong here.