Bank staff despair for their future
Siobhan Creaton examines the banking sector's financial health as employees believe tough medicine is on the horizon
THE Government's decision to guarantee the Irish banks saved the entire system from collapse, but, two years on, thousands of bank officials in those banks still fear for their jobs and despair for the future.
The two main banks have lost more than 3,300 personnel between them while foreign-owned lenders have left the country or closed their branches with the loss of a further 3,000 jobs since the crisis began.
Bank staff who were once proud to be bankers are now embarrassed by the 'B' word. In social settings, they describe themselves as working in financial services, while those working for Anglo Irish Bank, now owned by the State, say they are civil servants.
They, more than others, feel their career prospects have been ruined by Sean FitzPatrick and his senior management's reckless behaviour. "Anglo staff get a very hard time from the public because they are seen as the worst of the worst," one insider says.
For many of the 800 people who have left Anglo since the bank's problems became public knowledge, there is added pressure as they look for new work.
"They wouldn't be seen dead with an Anglo umbrella or with any symbol of the company in public. And they know that when they apply for jobs elsewhere that having Anglo on their CV is a kiss of death. Even a couple of years on, it is still toxic. There is a lot of anger around. We all feel extremely betrayed by the old management," the insider adds.
Fears of further job cuts are shared by unions such as the Irish Bank Officials' Association, which has said that up to 10,000 jobs could be lost in the banking sector overall. AIB, which employs about 10,000 people in Ireland, cut about 1,200 staff from its payroll last year and is on record as saying it plans to cut further as the bank shrinks. Even those who have not lost their jobs have seen their pensions cut by 20pc while contributions have risen.
Rival Bank of Ireland is seeking around 700 redundancies as it seeks to meet its aggressive cost-cutting targets by 2013. While the redundancies are voluntary, it is not clear what will happen if nobody signs up. The bank lost 805 full-time equivalent employees between June 2009 and June 2010 alone.
Over at Irish Nationwide things aren't much better. Its 300-strong workforce have no idea what will happen to their jobs as the small building society will almost certainly be merged with another company in the near future.
They are among the lowest paid in the industry who, up until a few years ago, were still clinging onto the hope that their boss, Michael Fingleton, would succeed in demutualising the building society giving them all a big pay day.
"Fingleton was constantly promising there would be a golden egg for everyone while he was paying us buttons," one staff member says.
So far, Fingleton is the only one to take a "golden egg" from Irish Nationwide, walking away with €27m of the society's total €36m pension pot.
"That doesn't leave a lot for the rest of us," they say. Everyone is demoralised and, like their colleagues in Anglo, fear they will be tarnished by the society's disastrous property lending under Michael Fingleton's watch.
Life at the two bigger banks, AIB and Bank of Ireland, is also difficult. AIB staff are perhaps facing the greatest uncertainty as they wait to see whether the bank will ultimately slip into state ownership -- something that could happen today or later this year.
Its chief executive Colm Doherty is currently selling off its crown jewels in a bid to raise €7.4bn by the end of the year, to stave off nationalisation, but few believe he will succeed as even the NTMA struggles to raise cash overseas.
"Until the cash comes in, we won't know what is going to happen," one AIB banker says. "We are expecting job losses, branches to be closed and more outsourcing. AIB will revert back to the bank it was before the 1960s and could be left with a bank solely reliant on the Republic of Ireland, without even a presence in Northern Ireland. This is terrible."
Branches in Australia and other far-flung parts of the bank's empire have already been closed. Closures closer to home seem likely.
AIB bank has been slow to admit the extent of its bad loans and many of its staff are concerned that they still don't know the full picture.
"We believed Eugene Sheehy (the bank's former chief executive) when he said AIB would come out of this as the strongest bank," the official said. "But we are cynical now."
Doherty's appointment to the top job hasn't done anything to reassure the bank's officials about its ability to weather this storm.
"Colm Doherty has tried to distance himself from what happened but he was on the board and is therefore tarnished by everything that went on.
"Many people think he should be the last person to run this bank," they said. "These people were all part of the problem and are now all being handsomely paid to be part of the solution."
Doherty is a formidable figure and has largely brought his own team from the bank's capital markets division to help him to run the distressed bank at this crucial time and has so far failed to impress AIB's workforce with his vision for the future.
"He doesn't engage with staff but just implements things in a very forceful way," one said. "His only response so far is to sell his way out of trouble. There is supposed to be a group of 12 people simultaneously drafting a business plan for the shrunken bank but staff are not sure what is really going on. People are asking, 'does anyone who is running the bank at the moment know what they are doing?'
There are concerns that instead of learning from past mistakes, that AIB is set to repeat them by putting increased pressure on staff to aggressively sell its credit cards, loans and other products, with not enough emphasis on the customer's ability to repay them.
"We have been told that the only way to recover is to sell. We are not to think of ourselves as working in branches, but as retail outlets or shops."
And just as its customers are suffering from negative equity and huge debts, a large number of staff in all of the financial institutions are also in financial trouble.
AIB and Bank of Ireland both have designated units to deal with these issues that are affecting the most senior and junior employees. "A lot of senior managers are very highly leveraged and were depending on their bonuses to clear the loans," according to one banker.
In some cases, bank staff have complained to the Ombudsman about the credit institutions for what they feel has been their particularly harsh treatment, compared with the bank's approach to recovering money from customers.
Staff at Bank of Ireland, while more secure in terms of its capital requirements, are still feeling vulnerable. "There was a degree of confidence that we were the best of the banks and we seemed to get ourselves into order ahead of the others with a restructuring plan," according to one insider.
"But now the restructuring is done, it is disappointing to see this is not being reflected in any improvement in the bank's performance anywhere. In fact, Standard & Poor's has since downgraded it so the uncertainty is not going away."
As if to confirm those fears, the bank's shares hit a 52-week low this week of 53.5c -- less than many staff would have paid to buy shares during the bank's last rights issue.
With almost 3,000 jobs axed between AIB and Bank of Ireland in the past year alone due to early retirement and the non-replacement of staff, the banks are not happy places right now.
Unfortunately, it seems certain many more jobs will be lost in the sector in the months ahead as banks and building societies merge to survive.