(Bloomberg) -- Ireland is said to be planning to allow banks that were bailed out during the financial crisis to pay bonuses to staff, ending a long-standing ban.
A retail banking review will be brought to Ireland’s cabinet on Tuesday and will be published if it is approved, according to the Department of Finance.
Bonuses will be one of the issues the review deals with and there will be changes, according to a person familiar with the matter, who asked not to be identified because the matter is sensitive. The limit is expected to be €20,000 ($20,714), the Irish Times reported earlier.
The state recently sold or scaled back its ownership of some of the banks it rescued during the financial crisis, when it also imposed pay restrictions and effectively banned bonuses. The government sold its remaining shares Bank of Ireland Group Plc in September and has reduced its holdings in AIB Group Plc.
Financial Minister Paschal Donohoe plans to end executive pay restrictions at Bank of Ireland and propose the removal of the €500,000 pay cap at AIB and Permanent TSB Group Holdings Plc, once the government’s stake falls to “appropriate levels,” according to the Irish Times.
AIB shares rose as much as 2.9% to €3.01 in early trading Tuesday. Shares of Bank of Ireland rose as much as 1.2% to €7.26.
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Overall, the state injected about €64 billion into Ireland’s banks during the financial crisis, with about half of that spent on the former Anglo Irish Bank and Irish Nationwide, which were since wound down.
The government has so far reduced its stake in AIB to 57% from 71% via a share-trading plan it announced at the end of 2021. Taxpayers also own about 62% of Permanent TSB, according to Bloomberg data.
READ: Ireland Needs to Address Banks’ Crisis-Era Scars, IMF Says
Bank of Ireland’s former Chief Executive Officer Francesca McDonagh had been critical of the pay restrictions, saying they put Irish firms at a competitive disadvantage. Even so, the bank was granted an exemption from the limit to hire her in 2017 and her successor Myles O’Grady receives the same €960,000 package, according to the Irish Times.
(Updates with share moves in 6th paragraph.)
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