AIB to axe 2,000 jobs
Allied Irish Banks (AIB) today announced that it expects to axe more than 2,000 jobs by the end of next year.
The group recorded a €10.4bn loss last year and claimed business and market conditions remained difficult.
It said costs needed to be lowered, with staff to go on a phased basis during 2011 and 2012.
The €10.4bn loss last year compares with €2.3bn in 2009.
AIB, once Ireland's largest bank but now 92.8pc state-owned, needs another €13.3bn bailout after the results of long-awaited stress tests.
The Government plans to shrink the banking sector from six homegrown lenders to two so-called pillar banks.
AIB and EBS Building Society will merge to form one banking "pillar", while Bank of Ireland will form the second.
AIB employs around 12,000 staff through its Irish divisions, with another 2,507 in its UK operations.
The bank said the commitment of further state support highlights its systemic importance to the domestic Irish economy.
"The very strong capital base that will result from the generation of €13.3bn of capital will enable AIB to provide long-term support to its customers and play an active role in the recovery of the Irish economy," the bank said in a commentary on the results.
Some €7.2bn in state support has already been pumped into the bank.
David Hodgkinson, AIB executive chairman, said the job losses would be spread across the organisation as the bank needs to "slim down".
"We expect to get the vast majority on a voluntary basis," he told RTE Radio.
"The first thing we have to do is to agree with our major stakeholder, the Government, on what is appropriate and then we will start the consultation period with the union."
Mr Hodgkinson said he believed the bank should be "reasonably generous" to staff facing redundancy.
The executive chairman said the group's losses were about poor- quality loans where the bank does not not expect to get paid.
"There was almost a kind of collective madness, everybody went crazy on property and for a very long time," he said.
AIB lost €7bn on loans it transferred to "bad bank" the National Asset Management Agency (Nama).
Larry Broderick, general secretary of the Irish Bank Officials Association (Iboa), said he was appalled that the staff were just learning of their fate.
"I would have thought, given the seriousness of this and the fact that the vast majority of staff are not responsible for the mess that AIB is in, that courtesy would have been given to them and they would have been advised in advance," he said.
Mr Broderick said the job losses were the equivalent of a major multinational pulling out of the country.
And he warned that the Government's plans to restructure the state's banking sector could impact on around 6,000 bank workers.
Mr Broderick called for a meeting with Taoiseach Enda Kenny and Tanaiste Eamon Gilmore over the banking sector plans.
"This is a major, major blow for many, many families in Ireland today," he told RTE Radio.
He said achieving the redundancies on a voluntary basis would be extremely difficult, but claimed it could be done.
But he said he would like the period for the cuts to be extended to three years.
AIB said the changes would result in a new core bank being established with a restructured balance sheet, which will be achieved through the disposal and winding down of non-core assets.
"This new AIB will form a strong foundation from which a profitable business can be rebuilt," the finance house said.
"The speed at which AIB recovers and returns to a position of profitability and selfcapitalisation is heavily influenced by Ireland's economic prospects."
Brendan Howlin, the Minister for Public Sector Reform and Expenditure, said it was a bleak day for bank workers.
"It is clear that there is going to be a considerable downsizing of the banking sector in Ireland, that's true and that will involve job losses," Mr Howlin said.
"It already has involved job losses for an awful lot of people.
"I think what people want now generally is some level of certainty."
Mr Howlin said the decision to restructure the banking sector was the beginning of that process.