AIB to make major job cut moves in New Year
AIB executive chairman David Hodgkinson has said the country's second-largest lender may announce job cuts in the first quarter of next year after he completes a restructuring plan for the company.
"The new, smaller structure will mean that we will need fewer people overall than we have now," Mr Hodgkinson said this week in an email to employees.
AIB will also set up a "dedicated restructuring function" for businesses which "do not meet the future risk and/or return profile" of the group, he said.
Irish lenders are being forced to boost their core Tier 1 capital ratios, which gauge financial strength, to at least 12pc as part of an €85bn international aid package for the country agreed on last month.
The bank, which faces majority state ownership, said on Tuesday it had been directed by the Central Bank to raise €5.3bn of additional capital to reach a core Tier 1 capital ratio of 14pc. This means AIB, which is already 18.7pc government-owned, will have to raise a total of €9.8bn by the end of February, including previous capital targets set by the Central Bank.
The €9.8bn is in addition to €3.4bn the bank is generating from disposing of Polish and US assets.
At the end of December 2009 the bank employed 24,600 staff, according to its most recent annual report. This includes staff in the Polish subsidiary Bank Zachodni WBK SA, which it has agreed to sell.
Meanwhile, financier J Christopher Flowers said he was planning purchases in Europe as he expected the sovereign debt crisis would not spread to Spain and Italy.
"I think Spanish and European authorities will avoid this turning into a sovereign debt crisis for Spain," he said in an interview in London yesterday. "My own guess is that this crisis will be contained, that Spain will get through this okay and Italy as well."
The founder of New York-based private equity firm JC Flowers & Co is looking at Irish banking assets and sees "potentially interesting deals" in the UK, he said in a separate Bloomberg television interview. He aims to use his recent investment in UK Kent Reliance Building Society as a platform for further acquisitions in the country.
"We've taken a look at Irish banks and if we can find the right opportunity to invest in Ireland, we would like to do that," Mr Flowers said. "In Britain as well. We hope through that investment in Kent Reliance to do more in this country."
Leveraged buyout firms, including JC Flowers and Washington-based The Carlyle Group, have raised funds targeting banking assets as the most severe financial crisis in decades is forcing lenders to sell assets.
Private equity firms have led $49.5bn (€37.6bn) of takeovers in the financial services industry since the collapse of Lehman Brothers in September 2008. (Bloomberg)