AIB axes branches and moves services to An Post in profit bid
AIB will close a number of its branches on top of job losses and pay cuts recently announced as part of an aggressive cost-cutting drive aimed at returning the state-owned lender to profitability by 2014.
The bank, whose Irish branches swelled to 270 before the bursting of a property bubble brought it and its rivals to their knees, did not specify how many it would close, only that a number of its services would move to An An Post.
"Our distribution network will be enhanced by the new An Post (Irish post office) initiative ... regrettably, this means that the number of branches will reduce as part of the move to lower costs," the bank said in an internal strategy document seen by Reuters.
Forced to ditch its international ambitions after a humbling €20 billion State bailout, AIB was effectively nationalised last year and is in the process of axing 2,500 jobs - almost 20pc of its workforce - and cutting salaries by up to 15 percent.
The bank said in the document that the take-up for its early retirement scheme had been particularly strong and as a result, it did not anticipate the need for further job cuts before the current severance programme ends in 2014.
The bank also said Fergus Murphy, former chief executive of the EBS building society became part of AIB last year, will take over as head of products in a simplifying of its management structure.
Chief executive David Duffy said he would be making further appointments in the near term and reiterated that in tandem with cost reductions, the bank will be adjusting the pricing of its lending products more in line with competitors and its own costs.
"We need to take steps which will ensure AIB is not dependent on State support - and instead is a bank that is largely deposit funded," Duffy told staff in the document.
"It is important that we can make this transition and attract new investors, allowing us to return funds to our shareholders and the taxpayer."
Meanwhile, the trade union IBOA called on AIB to clarify its plans as soon as possible and give details.
General secretary Larry Broderick said news of the branch closures was concerning for the union.
"The bottom line is the bank needs to clarify for customers and staff where these branch closures will be, what impact they will have and when the closures will take place," he said.
It is understood AIB has struck a deal with An Post to extend banking facilities throughout the country's post offices, which will see customers being able to lodge cheques and deposits.
Bosses told workers in a 24-page strategy document today that the An Post initiative will help with the bank's restructuring plans.
"Regrettably, this means that the number of branches will reduce as part of the move to lower costs," it stated.
"But, through the use of mobile banks and new branch openings in selected areas, AIB will bring banking services to new locations."
The bank announced plans in March to lay off 2,500 workers by the end of 2013 in a bid to save 170 million euro in a year.
Half the redundancies will be made this year and the other half next.
But the AIB source claimed that no additional staff will be made redundant as a result of the closures confirmed today.