Reforms at AIB to save €30m by abolishing staff perks
COMPANY cars, free golf club and gym memberships and special interest rates for AIB staff are to be abolished under sweeping reforms of the perks traditionally associated with a bank job.
The cuts are tipped to save €30m for the bank as part of a €200m cost-cutting effort that includes 2,500 redundancies. The perks will all disappear within months, staff were told yesterday.
Top managers are also being hit with pay cuts of up to 15pc and "gold plated" defined benefit pensions will be ended for all staff under the plans.
The cuts come as AIB finalises an overall restructuring plan due to be approved by the EU authorities later this summer.
The move on pensions was blasted by unions last night.
CEO David Duffy told staff that providing a large number of staff with a defined benefit pension is "prohibitively expensive."
He said the bank intends to move all employees onto defined contribution pension schemes, where payments to pensioners can vary depending on the performance of invested pension funds, instead of fixed.
Defined benefit schemes were already being phased out for new starters at all of the main banks before the financial crisis.
Bank of Ireland continues to operate a modified version of the scheme after cutting its pension deficit from €1.4bn to less than €5m over the past two years.
However, Larry Broderick of the IBOA banking union said ending defined benefit pensions will save little for AIB, but will have a significant impact on the retirement income of ordinary bank officials.
SIPTU, which represents canteen staff, security and other non banking AIB staff, said the move would be resisted. Union official Adrian Kane said the manner of the announcement, before talks with unions marked "a serious deterioration".
Trade union officials said that yesterday's announcement had been timed to pressure AIB staff, coming as it does just before the close of a deadline for application for an early retirement scheme on June 20.
AIB began a consultation process with trade unions in March to cut 2,500 jobs out of a total of over 14,000 through early retirement and redundancies.
All of the cuts were announced in an email sent to staff today, and seen by the Irish Independent.
AIB chief executive David Duff's salary is to be cut by €75,000 to €425,000. The same 15pc cut will apply to all of the most senior managers at the bank -- members of its executive committee or "ex comm" -- and the cut will apply to salaries and other pay-related allowances.
Other senior managers face pay cuts ranging from 15pc to 7.5pc under the plan. Middle management and ordinary bank staff will not be hit with pay cuts, but a pay freeze in force since 2008 is to be extended until the end of 2014.
The biggest change for most staff is the end of perks like cheap loans, gym membership and company cars.