Banks have been told to cut total remuneration by between 6% and 10% by Minister for Finance Michael Noonan.

The savings are to come from reductions in payroll and pension benefits, new working arrangements and efficiency gains.

The development follows the publication of a study by consultants Mercer into pay at Irish banks.

Banks are expected to report back to Government in the coming weeks on their plans to cut costs.

While total remuneration costs are down at Irish banks since 2008 due to the elimination of bonuses, basic salaries have increased according to the Mercer report.

Generally basic pay has increased by between 4% and 6%, but in the case of IBRC it jumped by 16%.

Responding to the report, Bank of Ireland reiterated its objectives to reduce its cost base, including in the area of payroll.

A spokesperson said that "employee costs have been reduced by 23% over the past four years and these costs will continue to reduce".

A statement from AIB said the bank "fully supports" the Government's policy and said it was working to reduce its cost base to more sustainable levels.

The statement said a large part of this would revolve around plans to reduce the number of people working at the bank, as well as changes to its pay and benefits structure.

A spokesman for Permanent TSB noted the Mercer report and said the bank would "set up a process to achieve this target in as fair and equitable a manner as possible while accepting the different positions in which different employees find themselves.”

He said that as part of this the bank would initiate a 'Pay and Benefits project' in the coming weeks.