Allied Irish Bank (AIB) has announced plans to reduce staff costs by €170m (£142m) through 2,500 voluntary staff redundancies.
AIB has entered into a consultation process with trade union representatives from the finance union IBOA in order to achieve a 17% reduction in its overall staff numbers, with half of those scheduled for this year.
David Duffy, chief executive of AIB, says: “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.
“I am confident that AIB will achieve sustainable profitability with a reduced cost base essential to delivering this recovery.”
If staff costs cannot be reduced through voluntary measures, AIB says it will need to consider other options in due course.
The bank has not commented on the union’s response to the proposals but, following the initial consultation, IBOA issued a statement decrying the redundancies as likely to have a “devastating impact ” on employees and their families.
“Although we have been expecting an announcement on the bank’s restructuring plan for some time, the scale of the proposed job losses means that ordinary bank staff are being asked to suffer the consequences of the mismanagement of the bank’s affairs to a disproportionate extent,” says Larry Broderick, general secretary of IBOA.
IBOA says that the Irish banking sector has suffered 6,000 job reductions since the autumn of 2008.
Full details on the launch of the programme are expected to be announced in early April as it is not yet clear how the redundancies will be spread across the AIB’s divisions.
AIB’s loan-to-deposit ratio target, following the bank’s recapitalisation in early 2009, is 122.5% by 2013. The group’s underlying loan to deposit ratio was placed at 143% in its most recent half yearly financial report, down from 165% at December 31, 2010.