The chief executive of the new Strategic Banking Corporation of Ireland (SBCI) will be the first head of a state-owned bank since the crash to be hired without being subject to a formal €500,000 pay cap.

The head of the bank will be hired under the umbrella of the National Treasury Management Agency (NTMA), where chief executive John Corrigan's €416,500 salary is the highest currently paid to any member of staff.

Salaries at the NTMA are not subject to a formal upper limit However, it is thought unlikely that any member of staff, including the head of the new bank, will earn more than Mr Corrigan, who is due to retire.

The process to recruitment a head for the new bank is underway. It is being set up to lend to small and medium sized enterprises (SMEs). It will eventually have as much as €4bn available to lend.

Pay for the heads of state owned AIB and Permanent TSB is capped at a maximum of €500,000 a year under rules introduced in 2009. In theory, the same cap applies at Bank of Ireland but its chief executive Richie Boucher was in situ before it was introduced.

Junior Finance Minister Simon Harris confirmed yesterday that the SBCI will be launched next month, with lending likely to begin before the end of the year.

The bank was incorporated as a company on September 12 and the interim board held its first meeting last week.

"Loan agreements with the funders will be signed in the coming weeks. Following that the SBCI will sign lending agreements with banks and funds who can take funding from the SBCI and lend that on a prudent basis to SMEs," Mr Harris said at a Funding SMEs in Recovery conference organised by the ESRI and Department of Finance.

A separate recruitment process to replace Mr Corrigan is currently underway.

Irish Independent