AIB, Bank of Ireland payouts capped at €225,000 or two years' salary

AIB AND Bank of Ireland have announced long-awaited details of voluntary redundancy payouts on offer to about 3,500 staff who could leave the two “pillar” banks.

The scale of the severance payments are considerably lower than what was on offer in the industry during the first two years of the banking crisis as the Government sought to bring terms in line with other public sector payouts.

Bank of Ireland has reduced the payouts to three weeks per year of service, plus the statutory entitlement of two weeks’ pay, from six weeks’ pay plus the statutory two weeks under a job-cutting plan announced in July 2010.

The bank secured 350 redundancies out of 750 sought at that time so the lower payouts will apply to the remaining 400 staff.

A spokesman for the Irish Bank Officials Association (IBOA) said the bank would be seeking a further 600 redundancies over the coming months, though the bank said that any figure on additional job cuts was “purely speculative”.

Based on the IBOA’s figures, this means a further 1,000 staff will be leaving the bank in addition to the 350 who have already departed under the redundancy plan announced in July 2010.

AIB, which is seeking 2,500 redundancies, told staff that an independent mediator had recommended that the bank offer either three weeks’ pay per year of service, plus the statutory two weeks’ pay, or four weeks’ pay, including the two weeks’ statutory, whichever is better for employees.

Payouts at the banks are capped at €225,000 or two years’ salary, whichever is lower.

This means that some higher earners who have already left under Bank of Ireland’s July 2010 redundancy plan may have received more than €225,000.

Both banks are offering early retirement deals, though AIB

, while Bank of Ireland’s offer is open to staff between 55 and 60.

Departing staff at both lenders will receive at least €10,000 under the terms of their severance.

AIB expects a large proportion of the 2,500 redundancies to be secured through early retirement. The payout terms are also on offer to staff at AIB’s subsidiary, EBS.

AIB human resources director John Conway said the bank could consider the recommendations of independent mediator Kevin Foley, director of conciliation at the Labour Relations commission, and let employees know its decision early next week.

The bank said that voluntary severance will run through phases up to March 2014, while staff who retire early will have a chance to leave AIB by the end of this year.

Bank of Ireland has since March 2008 cut staff numbers by 3,800 to 13,234.

The IBOA’s talks with the bank management had concluded terms for the voluntary severance of up to 1,000 more staff, the union’s general secretary Larry Broderick, said yesterday. “While it is extremely disappointing that over 1,000 more employees are likely to leave Bank of Ireland . . . the union welcomes the fact that these departures will take place on a voluntary basis,” he said.

Mr Broderick said the union wanted an urgent meeting with AIB management to seek further details on the redundancies.

AIB has said the 2,500 jobs would be cut proportionately across 12,500 staff in the Republic and 2,500 staff in Northern Ireland and Britain but has yet to identify where exactly the jobs will go.

DIRECTORS DEPART: TWO AIB EXECUTIVES LEAVE LATER THIS YEAR

TWO LONG-SERVING AIB executives, director of human resources John Conway and director of corporate affairs and marketing Alan Kelly, will leave the bank later this year, chief executive David Duffy told staff yesterday.

Mr Conway has spent 39 years at the bank; Mr Kelly more than 35 years. Their departures were announced after Mr Conway announced redundancy terms for the 2,500 job cuts AIB is seeking.

Mr Kelly is understood to have been offered another senior role by Mr Duffy but has chosen to leave. Mr Conway will retire at the end of the year.

The bank is looking for external candidates to replace the two executives. Mr Duffy said the search will be conducted by an international recruitment company. Both Mr Conway and Mr Kelly will remain in their jobs until successors are appointed.

Mr Duffy told staff Mr Conway had decided it was “an appropriate time to hand over to a new human resources director” after leading the bank through the redundancy plan. Mr Conway had “worked hard to bring stability to the bank during a very turbulent period”, Mr Duffy said in an internal email.

Mr Kelly has recently set up AIB’s corporate affairs and marketing division, he said.

State-controlled AIB is undergoing the most radical shake-up in its 46-year history as the bank reduces in size to wean itself off Government support and a heavy reliance on cheap funding from the European Central Bank.

Mr Duffy is set to make further changes to the bank’s executive committee after taking over as chief executive in December 2011.

EBS chief executive Fergus Murphy is being lined up as the bank’s head of corporate institutional and commercial banking following the retirement of AIB veteran Jerry McCrohan.