ANALYSIS: AIB has kept the door ajar for forced redundancies
WHETHER ANY of the 2,500 job cuts confirmed by State-controlled Allied Irish Banks yesterday will be compulsory will depend on the terms of the severance pay and the early retirement deal on offer.
Details of both have not been disclosed by the bank which is embarking on the biggest job-cutting plan ever devised by an Irish bank. The bank is optimistic that it will be able to cut one in six jobs across its 15,000-strong workforce through voluntary departures.
But it has kept the door ajar for possible compulsory redundancies saying it would “need to consider other options in due course” if it didn’t get them voluntarily.
The Irish Bank Officials Association (IBOA) said more senior staff may be incentivised to retire by the inclusion of early retirement packages in the job-cutting plan.
The scale of the job losses exceeds the 950 at Ulster Bank announced in January or the 1,000 at the same bank in 2009.
A further 750 jobs were lost at Bank of Scotland (Ireland)/Halifax when Lloyds decided to close the bank. Other foreign-owned retail banks, National Irish Bank and ACC Bank, reduced their headcounts much earlier in the crisis. There were also smaller redundancy plans at the other State-guaranteed banks. Some 750 jobs are being cut at Bank of Ireland and 360 job cuts were announced last year at Permanent TSB.
Irish Bank Resolution Corporation (IBRC), the new entity that houses the former Anglo Irish Bank and Irish Nationwide Building Society, is slashing jobs more severely.
The headcount at what were two lenders will fall from a combined 2,200 at their peak to between 600 and 700 this year.
But IBRC is in a different space – it is being wound down over a long period; AIB has been deemed to have a viable future as one of the Government’s two “pillar” banks.
Staff have also been leaving the banks outside of the redundancies programmes and not replaced.
The IBOA estimated that, excluding the AIB redundancies, the number of jobs at the banks have reduced by 6,000 since the start of the banking crisis in 2008.
“This continuing haemorrhage of jobs in the financial sector shows no signs of abating,” said IBOA general secretary Larry Broderick. Unlike the recent jobs announcement at Ulster Bank, AIB did not identify where the 2,500 jobs will go ahead of consultations with the trade unions representing employees at the bank.
The bank said details of the programme would be announced in early April following consultations with trade union representatives. This is unlikely to raise staff morale within AIB. It has been almost a year since the bank announced it would be seeking more than 2,000 cuts.
Yesterday’s announcement provides little further detail of what’s on offer to staff that will determine whether they accept the deal and AIB can get on with reducing its staff costs by about €170 million.
David Duffy, the bank’s recently-appointed chief executive, outlined that the cost savings would not stop with the redundancies. He signalled to staff in an email that the bank may need to reduce pay and benefits for any staff who do not accept the redundancy or early retirement packages given “ongoing commercial pressures”.
He said AIB was working on a strategy to outline the future course of the bank and the banking industry in Ireland.
“This strategy will enable AIB to become a sustainable and profitable pillar bank that will provide vital support to the Irish economy,” he said in the email.
The purpose of the job cuts is part of the plan to return to profit.
AIB and the wider banking sector became too big and the country became over-banked.
There is no need for the 40,000 staff the Irish banking sector had at its peak five years ago, to be employed in a retail banking sector serving four million people.
There has been a dramatic decline in the level of banking business being conducted in Ireland. New mortgage lending has plummeted by more than 90 per cent since 2006. The redundancies simply reflect the new realities in Irish banking.
