The Minister for Finance says approximately 30 staff members will move from AIB to Goodbody Stockbrokers when the bank completes the purchase of the business.

Paschal Donohoe said these staff members will be paid as Goodbody staff. 

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.

AIB yesterday announced the deal to buy Goodbody Stockbrokers from its existing shareholders for a total consideration of €138m. 

Goodbody is 51% owned by Co Kerry-based financial services firm Fexco. 

The rest is owned by management and certain staff, led by its managing director Roy Barrett.

Completion of the purchase is still conditional on certain conditions, including approval by the Central Bank and the Competition and Consumer Protection Commission.

Speaking on Morning Ireland, Paschal Donohoe said the bank will want people in place who can integrate Goodbody into the AIB business. 

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He explained that if he did not have a way of allowing 'this very small amount of movement' it could create a situation whereby people leave AIB to work in Goodbody and circumvent the pay policies in place. 

Mr Donohoe said he believes this is appropriate because the purchase of Goodbody stockbrokers by AIB is very good for three Irish businesses - AIB, Fexco and Goodbody. 

He said Goodbody staff will not be subject to pay policies that are in place in the banking sector because when this policy was put in place it was not envisioned to cover a stockbroking firm. 

No change to banking remuneration policy, says Donohoe

AIB buys Goodbody Stockbrokers for €138m

In order for this to be a successful purchase, it is appropriate that Goodbody can continue to pay their staff as they have been doing, he added.

The Finance Minister also said that the banking system in Ireland is facing challenges because it is going through a period of real change.

One key factor is low interest rates which Mr Donohoe said is making it more difficult for retail banks to have the level of profit to sustain their current scale. 

He said it was important that the banking system continues to employ a lot of people and is able to treat customers fairly.  

Mr Donohoe said he believes that the vast majority of additional costs due to Covid-19 will be dealt with because the country entered the crisis with a well run economy and its national finances in good condition. 

Meanwhile, Labour's spokesperson on Finance, Public Expenditure and Reform said he believes the AIB decision to buy back Goodbody Stockbrokers is a serious matter of public interest because the Government is a majority stakeholder in AIB.

Under the terms of the deal, the remuneration policy of the investment firm will be ringfenced from its new parent, allowing staff to continue to receive bonuses. 

Ged Nash said he is afraid that this marks the beginning of a bonus culture in banks that "sunk this economy just over a decade ago".

He added that no-one wants to see the return to risky behaviour that was encouraged by excessive speculation and risk taking. 

This is the first time since the introduction on the cap on bankers pay and disincentivisation levies that a Finance Minister has signed off on these kinds of bonuses, Mr Nash said.

He added that he is afraid it is a "potential Trojan horse" that could see a queue of bankers in State-supported banks looking for similar treatment.