The Minister for Finance has insisted there has been no change to the Government policy on remuneration policy at Irish banks, as a result of the purchase of Goodbody stockbrokers by AIB.

Paschal Donohoe said AIB, which the state owns 71% of, will continue to strictly observe the Government restrictions despite the transaction, and controls would be put in place to govern it.

"The banking remuneration policy for people currently working in AIB and who will continue to work in AIB, is not changing," he said.

He said when it comes to remuneration, Goodbody would be ring-fenced from AIB Group, which like other retail banks is governed by a €500,000 per year salary cap and an 89% levy on bonuses put in place in the wake of the financial crisis.

Mr Donohoe said 20 staff would be allowed to transfer to Goodbody from AIB's Corporate Finance and Wealth Management business initially to avoid duplication of activity, followed by 10 more in the year after that and five people per year in subsequent years.

He said the Department of Finance would have oversight of this process, with an independent accounting firm being appointed to monitor the process and report back.

There would also be restrictions on Goodbody hiring anyone with total remuneration above euro50,000 who was an employee of AIB or any of its group companies at any time in the last two years.

He added that Goodbody will remain a regulated entity with its own brand and board.

"Of course I am absolutely aware of the sensitivity of this issue," he said.

"But the reason why I am giving agreement to this transaction happening in the first place is that a couple of weeks ago we have been reminded of the importance of banks that are in Ireland, and indeed banks that are owned by Irish taxpayers, of ensuring that they have more diverse business models, they are able to supply more services to customers and in turn ensuring they have a more viable future."

"That is the reason why I am making this decision. I believe it is a decision that gets the balance right between respecting the integrity of the pay policy that is in place, but at the same time delivering a purchase and sale that I think will work for three Irish companies - Goodbody, Fexco and AIB." 

However, Sinn Fein's finance spokesman, Pearse Doherty, described the decision as "more than odd".

"The legislation is very clear," he said.

"AIB is a named entity in relation to the bankers' bonuses cap. Goodbody will be 100% owned by AIB and whatever type of engineering or ring-fencing you want to create, all it is about is the Minister for Finance after state investment, which it will end up being, trying to ensure that bankers that their remuneration is able to be exceeded than what already applies."

"It shouldn't be allowed," he added. 

Mr Doherty added that Sinn Fein would be challenging the move. 

A report, commissioned by the Government, which is understood to recommend an easing of pay restrictions on Irish bankers, has been with the Government for two years.

Banks have repeatedly argued that the pay caps and bonus levy have made it harder for them to attract and retain top talent.