Bank of Ireland has announced a series of compensation enhancements, including pay raises and the reintroduction of bonuses for its employees, marking significant changes in the financial sector's remuneration landscape. The move follows the government's easing of pay restrictions on banks that received bailouts during the financial crisis.
Today, the bank disclosed plans to implement a 4% salary increase for most of its 10,500 workforce across the Republic of Ireland and Northern Ireland. This decision is pending approval from the staff ballot. Moreover, employees based in the Republic can expect annual health insurance contributions up to €1,400 starting from the second half of 2024. These enhancements are part of a new agreement with the Financial Services Union (FSU).
In addition to salary hikes, about 8,000 workers are set to receive a personal benefit payment of €200 next month. This group primarily comprises non-managerial staff.
The Bank of Ireland is also set to reintroduce bonuses for the first time since the economic downturn. Starting next year, eligible workers can receive bonuses capped at either 10% of their salary or €20,000, whichever is lower. These bonuses are contingent on both individual and group performance metrics.
Chief People Officer Matt Elliott highlighted the bank's commitment to maintaining an attractive workplace amidst fierce competition from global financial services firms and tech companies. He also noted that good performance linked to positive outcomes for stakeholders would be rewarded through the Bank of Ireland's Profit Share Scheme.
Looking ahead, CEO Myles O’Grady and CFO Mark Spain are slated to receive shares worth up to half their salaries in future years as part of the bank's long-term incentive plan.
This wave of compensation improvements is not unique to Bank of Ireland. AIB, its main competitor, previously agreed on a three-year 10% pay rise for non-managerial staff and intends to introduce healthcare benefits in 2024. AIB will also limit cash bonuses to €12,700.
The recent developments come after the Irish government sold off its remaining shares in Bank of Ireland, lifting general pay caps and allowing for more competitive remuneration packages within the sector. The strategy that Permanent TSB (PTSB) will adopt concerning variable pay remains undisclosed at this time.
InvestingPro Insights
As we delve into the financial landscape of the Bank of Ireland (BIRG), InvestingPro Data provides some key metrics to consider. The bank's Market Cap stands at 10210.73M USD as of Q2 2023. The P/E Ratio, a key indicator of valuation, is 6.98, suggesting the bank is trading at a low earnings multiple. Moreover, the bank has experienced substantial revenue growth, with a 22.87% increase in the last twelve months as of Q2 2023.
InvestingPro Tips shed light on some potential challenges and opportunities for the bank. Despite poor earnings and cash flow potentially leading to dividend cuts, net income is expected to grow this year. Furthermore, the bank is trading at a low P/E ratio relative to near-term earnings growth, which could present an opportunity for investors.
For more comprehensive insights and detailed tips about BIRG and other companies, consider exploring InvestingPro's offerings. With an additional seven tips available for BIRG alone, InvestingPro provides a wealth of information to guide your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.