Vice President and Finance Minister Helio Fallas announced on Tuesday that the government will conduct an evaluation of all salary incentives and policies at public banks, following an investigation by the Comptroller’s General Office (CGR) last month. The investigation found that salary incentives and bonuses are hurting credit options for people and for small businesses.
According to the CGR report, between 2006 and 2012 Banco Nacional, Bank of Costa Rica and Banco Popular spent 23 percent of their profits to pay performance-based bonuses for most of their employees.
At a press conference in Casa Presidencial, Fallas said they agreed to the decision “in order to improve the banks’ competitiveness,” and then proceeded to read a press release signed only by “Presidency of Costa Rica.” The document states that the executive branch ordered public banks to submit within one month a full report detailing all criteria and parameters to determine the amounts paid in incentives and bonuses to their employees.
The executive’s agreement also orders the creation of a new commission that will include representatives of Casa Presidencial, the Finance Ministry and the Central Bank. The group will evaluate, within two months, all public bank incentive systems and their impact on performance. “The commission’s report will provide input for decision-making on this issue,” Fallas explained.
Casa Presidencial’s directive also calls on the banks’ boards of directors to adopt recommendations issued by the Comptroller’s report and to submit, also within one month, a report on actions performed for their implementation.
Comptroller General Marta Acosta last week sent the report to board members at the three banks and ordered them to establish mechanisms to calculate employee benefits “according to the financial situation of each bank and the socioeconomic situation of Costa Rica.”
Fallas added that board members of Bancrédito were also notified of the measures, even though that bank was not included in the Comptroller’s report.
“We believe in the importance of a dynamic and competitive public banking system as long as it operates within a framework of transparency and accountability, which strengthens its crucial role in the development of Costa Rica,” President Luis Guillermo Solís commented at the press conference.