Minister for Finance Michael Noonan has said he is unable to reduce the salaries of bankers who were awarded contracts before the Government came to power.

A spokesman for Mr Noonan, responding to reports that bailout money has been used to help fund the pensions of former senior bank staff, said pay caps had been applied to two bank chief executives since the Government was formed.

The cap applies to the chief executives of AIB and Permanent TSB who were appointed since March 2011.

However, Mr Noonan is not "legally empowered" to reduce "historic salaries" which are above the Government-imposed pay cap.

The cap applies to banks covered by the Eligible Liabilities Guarantee.

The spokesman said the Department of Finance is committed to a review of remuneration levels in banks that have been supported by the State.

He said the review would ensure bank workers are paid in line with workers with comparable roles in other Irish industries and in line with banking systems in comparable countries.

However, Opposition parties have said there is more the Department of Finance could do to limit the pensions being paid to former bank staff.

Sinn Féin said there was a range of financial instruments that could be used such as introducing special taxes or charges

Fianna Fáil spokesperson on finance, Michael McGrath said the Finance Minister Michael Noonan needed to clarify whether his officials raised any objection to the continued payment of a pension to the former head of AIB from the bank's defined pension scheme.