Minister for Finance, Paschal Donohoe, has announced the removal of the maximum pay cap for AIB and Permanent TSB (PTSB), marking a significant step in the State's continued disengagement from crisis-era controls on the banking sector.

The move comes as the State completed the sale of its remaining 2.06% shareholding in AIB, priced at €6.94 per share.

The transaction will return approximately €305.3m to the Exchequer, bringing the total recovery from the AIB bailout to €19.8bn.

The €500,000 annual salary cap had remained in place for AIB and PTSB, even after it was lifted for Bank of Ireland in 2022 following the bank’s full return to private ownership.

With today’s announcement, all three banks now operate without this remuneration restriction.

Minister Donohoe acknowledged the public sensitivity around executive pay but stressed the importance of aligning pay policy with ownership.

“It is not appropriate to impose pay conditions on institutions in which the State no longer holds shares,” he stated.

He described the decision as part of a broader "normalisation" of the State’s relationship with the domestic banking sector, including the removal of legacy crisis-era controls.

These controls were originally introduced through contractual agreements during the recapitalisation of banks following the financial crisis, and notably, they lacked any defined expiry date.

By lifting the pay cap at this stage, the Minister noted, the Government is ensuring competitive parity across the sector.

“This ensures a level playing field between Bank of Ireland and AIB, consistent with the updated shareholding positions,” he said.

The State remains a majority shareholder in PTSB, with a 57% stake, but the cap removal there is intended to prevent competitive disadvantages in talent retention and recruitment.