Ireland is one step ahead on bonus curbs

Taoiseach Brian Cowen's impassioned attack on bankers' bonuses is certainly in keeping with the attitude of other politicians gathering for the G20 summit in Pittsburgh this week, but it is really reflective if the current situation in Ireland?

Cowen used the words "crazy" and "obscene" to describe the figures handed out to senior banking executives in Ireland in an interview with the Sunday Independent, saying the argument that these payments were needed to attract the "best and brightest" was no longer valid.

Politicians at the G20 summit, kicking off on Thursday, are expected to work out a coordinated approach to rein in banker bonuses. Individual nations have already outlined their agendas, and the EU is looking to prioritise an end to guarantees; clawbacks and deferrals and higher relative salaries.

While Cowen's views are likely to be popular, you could argue that the implosion of the domestic banking market has spurred Ireland into action ahead of other nations. Large domestic players have already self-imposed drastic cuts to executive variable remuneration and bonuses have largely been eliminated lower down the ranks.

Then there's the Covered Institutions Remuneration Oversight Committee report published in March, which outlined lower pay levels for senior banking executives.

Even the best paid chief execs - those at Bank of Ireland and AIB - look likely to bring in a total of €690k this year. Yes, this still is a big pay packet (especially considering their catastrophic failures), but City investment bankers lower down the ranks are in some cases being offered guarantees of over 1m as firms once again grapple for the best talent.

Lower down the ranks these bonuses look far from obscene. Figures from recruiters Brightwater suggest that in a good year, bonuses are typically 8-20% of salary for those with up to 5 years' experience. For those with upwards of 5 years' experience, an average bonus would be 20-35%, and it's only in the very senior ranks where variable compensation becomes significant.