Bailout chiefs order banks to slash 2,500 workers
They tell the Government cuts must be made immediately to speed revamp
THOUSANDS of jobs in the banks must be cut urgently, the country’s bailout team has warned the Government.
State-owned banks are paying salaries to huge numbers of unnecessary workers, according to the officials keeping our finances in check.
They told the Government that a massive clear-out of bank staff was needed sooner rather than later, to smooth the way for massive restructuring.
Workers at bailed-out banks have been bracing themselves for close to 2,500 job cuts for almost a year.
But progress has largely been frozen as the Government and trade unions battle to agree redundancy terms.
Now, the Irish Independent has learned, the bailout team have told Taoiseach Enda Kenny and his Government that it is unhappy with the slow pace of progress.
They have made it clear in no uncertain terms that they want progress before the next financial check-up in April.
The team also warned that the failure to begin layoffs was delaying progress in the banks’ internal restructuring.
Bailout officials left Ireland at the end of last week broadly satisfied with progress under the €70bn rescue package – but there are underlying concerns over the pace of banking reform.
The European Central Bank’s mission head Klaus Masuch has also publicly alluded to their frustrations, stressing that the process of restructuring the banks was about more than simply selling assets.
Sources close to the bailout team said they could “understand” the difficulties that had arisen, but insisted that it was “important to make progress”.
British-owned Ulster Bank kicked off a year of expected job losses in the banking sector at the beginning of the month. It announced plans to cut 950 jobs from its Irish operations, with 600 to go in the Republic.
But plans to cut jobs in bailed-out banks -- including 2,000 at AIB and 350 at Bank of Ireland -- have not progressed in recent months.
Even the unions are resigned to the fact that job losses must happen soon -- but they want the best terms for their members.
The Government is stalling as it is unwilling to offer outgoing bank staff terms that would be seen as too generous.
It is keen to secure a "system wide" package that would work across the banking sector, including any job losses that might be triggered by merging Permanent TSB, which employs more than 1,000, with another institution.
While the unions have been pushing for the banks to pay the "industry norm" of six weeks' salary plus two weeks' statutory, the Government has been pushing for a less generous package -- close to the three weeks' pay plus two weeks' statutory that was used for recent HSE cuts.
"The Government has always stressed that any redundancy packages in the covered banks must be fair to the employees and also the taxpayer," the Department of Finance said.
But bank workers' trade union, the IBOA, said that the Department of Finance was now holding up the inevitable job losses.
"We share the troika's frustration at the total procrastination in terms of finalising this thing," IBOA chief Larry Broderick said.
"We said to the troika, through (trade union umbrella group) ICTU, that this was something that had to be prioritised."
Meanwhile, AIB has also told the union it cannot negotiate on its 2,000 job cuts because it has "no mandate" from the Department of Finance.
A spokesman for the department declined to comment on the progress of the redundancy negotiations, pointing to the "sensitivities" of the situation.
Sources insisted the issue was a "high priority item" and that negotiations were at an "advanced" stage.
AIB announced its job cuts last April and had hoped to begin laying off workers in October. Instead, staff have spent almost a year in limbo and have still not even been told what areas the job cuts will come from.
Bank of Ireland is planning to cut 350 jobs on top of the 400 it has already culled.
The merger of the former Anglo Irish Bank and Irish Nationwide will also prompt job cuts. Anglo is close to cutting 120 jobs in Ireland and the bank's remaining staff will go over the course of its 10-year wind-down.