Banking Salaries in Ireland and Elsewhere

When the Governor of the Central Bank, John Hurley, appeared before the Oireachtas Committee on Economic Regulatory Affairs on Tuesday, 10th March, he explained that the public exhortations of the Central Bank that highlighted risks to financial stability in Ireland from August 2007 were “not as effective as they might have been and they did not lead to a sufficient or timely change in behaviour”.

The Central Bank of Ireland's share of the paid up capital of the European Central Bank since January 2009 is 1.1107%. As a member of the European system of central banks it has no direct influence over interest rate determination but maintains responsibility for monetary policy functions and economic analysis - but there seems to be little attention to the latter, judging by the behaviour of the Irish banks and Mr. Hurley's comments.

The Committee were reminded that the Governor is paid an annual salary of €348,000, a figure that reflects the voluntary reduction taken by the Governor last October from the €368,000 that he had hitherto been paid.

It is interesting to compare the salary for this position with those whose influence on global economic affairs is absolutely pivotal and whose utterances and nuances hugely impact the world investment climate and the effectiveness of economic recovery initiatives.

The U.S. Federal Reserve System consists of 12 federal reserve banks located in major cities throughout the United States supported by the Federal Reserve Board based in Washington DC. The System as a whole employs almost 20,000 persons and the Board employs 2,053 persons. The annual salary of the Chairman of the Federal Reserve Board, Mr. Ber Bernanke, is $191,300 (€150,000), and was approved by the US Congress in February 2008.

The President of the European Central Bank, M Jean-Claude Trichet, oversees a staff of 1,499 persons and was paid €351,816 last year. He is also provided with a residence, in lieu of a residential allowance, but his salary is subject to EU tax, pension, medical and accident insurance deductions.

The Oireachtas Committee observed that the Canadian banking system “had operated quite well with prudential supervision of a high standard”. The Bank of Canada Governor, Mr David Dodge, whose 7-year term concluded on 31st January, was paid a salary scale the maximum point of which was CAN$407.900 (€250,000).

The Central Bank was founded in 1943 and Mr. Hurley is the 9th governor. He and seven of his predecessors formerly held the position of Secretary General of the Department of Finance. The exception was Mr. Maurice Moynihan, co-drafter of the 1937 Constitution and formerly Secretary of the Department of the Taoiseach.

The salary of the governor is therefore influenced by the salary of the Secretary General of the Department of Finance. This was set at €303,000 on 14th September 2007 by the Review Body on Higher Remuneration in the Public Sector, in its 7th general review, a figure that may have been reduced voluntarily by the current incumbent.