Editorial

Bank move is totally tone deaf

December 6th, 2022 11:40 AM

By Southern Star Team

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AN excellent piece of film making which reached our TV screens this week will also serve as a social commentary on a very important story in Ireland’s financial history.

Quinn Country, which ran on RTÉ One for three nights this week, was justifiably given due prominence in the primetime slot on the national channel.

A lengthy and almost forensically-detailed look back on the rise and fall of the Quinn empire, which had its roots along the border in the 80s, it was essential viewing for anyone interested in business in this country.

But it should also be essential viewing for any Irish citizen who wants to know why there is a 2pc levy on all non-life insurance policies here, and even the genesis of the arrival of the USC charge, which was meant to be a temporary charge to get us over the cost of the financial crisis of the noughties.

There were many stand-out moments in the documentary, not least of all the comments by Sean Quinn himself in relation to several issues. But his observation that Anglo Irish Bank reminded him of himself in his early days – their aggressive expansion strategies and rapid growth – was one of the most revealing in the three-part series.

Of course, it was Quinn’s major investment in the bank which became one of his most devastating errors of calculation. 

But another irony was that while the Irish public were watching the shenanigans on the border in this fascinating documentary, politicians were poring over the merits of relaxing the financial regulations regarding paying bonuses to banking staff.

Following pressure from the industry, the government finally agreed that the parts of the sector can now return to paying staff bonuses of €20,000. Furthermore, it was also agreed that banks will now be able to return to paying senior staff more than half a million euro in salary – Bank of Ireland initially, and the others, in time.

The word ‘greed’ came up several times during the Quinn story. Many believed that it was the ultimate cause of the multi-billion euro company’s downfall.

There is no doubt that imposing strict laws, in the aftermath of the crash, on banking salaries and curbing vulgar bonus payments helped to make the increased taxes taken from Irish paychecks more palatable to the public.

But if the timing was right when the massive salaries were curbed, it is certainly a mis-judgement now to think the time is right to re-instate them.

While the public finances might be in a much better state than a few decades ago – in many ways thanks to the aforementioned USC charge – personal finances are not reflecting that improvement.

The cost of living crisis, the housing crisis and the critical state of our healthcare are all bearing down heavily on our citizens. There is hardly a household that is not watching with trepidation how rising energy costs will impact on the ability to have a happy Christmas this year.

And there are thousands of young people in technology jobs wondering when the current raft of layoffs will end.

Few private firms have the ability to pay wage increases reflective of inflation, let alone large salaries or bonuses. They will look upon this latest move from government as another example of the ‘tone deaf’ culture of being distanced from the average voter.

They will ask why is a salary of a half a million euro, and all the likely associated benefits of such a senior banking role, not sufficient for a job in a country of just over five million people? 

They will ask why, not even two decades since the most horrific financial crash in living memory, are we going back to the big wage packets and bonus culture that promoted an environment where so many believed that, to quote Gordon Gekko in the film Wall Street, ‘greed is good’?

If a government continues to behave like it is tone deaf, maybe it is time for those opposed to its more hair-brained schemes to shout a little louder?

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