Opposition parties say it was the depth of public anger that forced Bank of Ireland Chief Executive Richie Boucher to effectively give up his controversial €1.5m pension fund top-up.
Unions had warned that anger over the deal could scupper the fragile Croke Park pay deal, while Labour Relations Commission Chief Executive Kieran Mulvey suggested the ongoing controversy was hampering efforts to sell the proposed public sector agreement.
Last night, it was announced that Mr Boucher would waive his option to retire at 55 years, removing the need to top-up his pension by €1.5m.
Mr Boucher made the announcement in a statement after the entitlement became public earlier this month.
A spokesman for the Taoiseach said the statement from Mr Boucher - in which the chief executive said he was sensitive to public debate on the issue - reflected earlier comments from Brian Cowen.
Fine Gael leader Enda Kenny said it was only public feeling and political pressure that had forced the u-turn.
Labour Party Finance Spokeswoman Joan Burton said Mr Boucher's decision was an important signal to the public.
Later, Tánaiste Mary Coughlan defended the coalition's handling around the issue of bankers' pay.
Responding to Opposition parties in the Dáil this morning, Ms Coughlan said that the Government had brought in measures to cap the salaries of senior staff in the banks.
Labour leader Eamon Gilmore said he welcomed last night's decision by Mr Boucher, but he asked if former Irish Nationwide Chief Executive Michael Fingleton would hand back his €1m bonus.
Elsewhere, Bank of Ireland has confirmed that it has started talks with a number of potential institutional investors with a view to assessing interest in raising capital.
The bank says its priority is to restore the strength of the business and support economic recovery.
