BAILED out Allied Irish Banks (AIB) will lay off 2,500 workers - one in six of its workforce - to save €170m in a year, it has been confirmed.
Union representatives fear branch closures are inevitable after bank bosses announced a deeper cutbacks plan with half the redundancies this year and the rest next year.
The massive lay-offs, the biggest in Irish banking, will be finalised in April with workers facing drastically reduced pay outs under strict Government rules.
Larry Broderick, Irish Bank Officials Association (IBOA) general secretary, said clerks, tellers, front desk staff and other rank-and-file workers are paying for reckless executives.
"It`s a devastating day for those thousands of staff who are not responsible for the state the bank is in today," he said.
"This continuing haemorrhage of jobs in the financial sector shows no signs of abating. We need a realistic strategy to strengthen existing employment and create alternative opportunities."
Bailed out with €20.7bn of public funds and merged with smaller finance house EBS, AIB has been hailed - alongside Bank of Ireland - as one of the country`s two "pillar" banks.
The 2,500 lay-offs are 500 more than announced in a redundancy plan last April.
Taoiseach Enda Kenny said it was a difficult day for workers but added he hoped they could find a future in Dublin's IFSC as it aims for 10,000 new jobs over five years - despite those facing redundancy mainly coming from retail front office banking rather than investment or currency trading backgrounds.
"I would hope that some numbers of those who worked in AIB would be able to gravitate to that sector," the Taoiseach said.
"Insofar as the Government are involved, obviously it's a difficult day for anyone to say I'm not going to have a job over whatever period."
The IBOA said to would protect as many workers as possible but warned that 6,000 finance workers have been laid off in since the banking crisis hit in 2008 including staff at Anglo, now the Irish Bank Resolution Corporation, Bank of Ireland, Ulster Bank, the shut down Bank of Scotland (Ireland) and Irish Nationwide.
AIB said it hoped to have half of the lay-offs completed this year and that it was aiming for them all to be voluntary.
It declined to discuss where exactly the redundancies would be made or how many branches were facing closure.
David Duffy, AIB chief executive, said if 2,500 voluntary lay-offs are not secured the bank would have to enforce job cuts.
"We aim to implement a severance package that is fair to people at all levels in the bank, while reflecting the very difficult financial position that AIB is in and the huge taxpayer support on which we continue to rely," Mr Duffy said.
"I am confident that AIB will achieve sustainable profitability with a reduced cost base essential to delivering this recovery."
The IBOA, which was briefed on the cutbacks by AIB executives and Department of Finance officials, said talks on a redundancy package would open with AIB senior management next week.
It is understood bank chiefs are under pressure from Government to ensure pay-off arrangements do not exceed packages already offered to Health Service Executive workers this year - three weeks' pay for every year of service on top of two weeks' statutory redundancy.
The bank confirmed it was working within Government rules and wanted a speedy conclusion.
"The programme forms an important part of AIB's return to sustainable profitability, allowing the bank to focus on its customers and support Ireland's economic recovery," the bank said.
AIB is the latest big bank to slash its workforce in Ireland after Bank of Scotland (Ireland) announced in 2010 it was pulling out of the country and Ulster Bank announced 950 redundancies in January.
Last year it sold its share in Polish bank Bank Zachodni WBK (BZWBK) to Banco Santander and its 49.9% stake in the Bulgarian-American Credit Bank (BACB) to CSIF AD. It has also sold AIB Investment Managers to South African group Prescient Holdings, assets it held in the US and a mortgage book it held in Latvia.
The bank was also redeploying staff all through last year to support its small and medium business clients and to deal with customers in difficulty.