ALLIED IRISH Banks has signalled that it is likely to seek reductions in pay and benefits for staff as the bank confirmed it is to seek 2,500 redundancies.
The redundancies plan, the largest announced by an Irish bank, will lead to one in six staff leaving the State-controlled bank, which with its subsidiary EBS has been bailed out with more than €20 billion in taxpayer funds.
The bank said the redundancies would be split proportionately across 12,500 staff in the Republic of Ireland and 2,500 staff at First Trust Bank in Northern Ireland and AIB’s British division.
Chief executive David Duffy told staff in an internal email that the bank has also been forced to review employee pay and benefits.
“Given ongoing commercial pressures we are also obliged to review our overall level of pay and benefits, and benchmark them to the current economic circumstances,” he said.
AIB said that the redundancy plan would reduce staff costs by €170 million or about 20 per cent.
The bank said that it expected half of the redundancies to be finalised this year with the remaining 1,250 staff to leave during 2013.
The Irish Bank Officials Association said the job losses would have a “devastating impact” on ordinary staff and their families.
“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,” said IBOA general secretary Larry Broderick.
The union said the redundancies were in addition to 6,000 job reductions across the Irish banks since 2008, and has called for a jobs strategy for staff laid off in the financial services sector.
Siptu, which also represents staff at AIB, said the number of redundancies being sought was “unacceptably high.”
The terms of the severance pay and early retirement packages on offer to AIB’s 15,000-strong workforce will not be disclosed until early April following talks with trade union representatives.
Formal discussions on the restructuring plan between unions and the bank’s senior management will begin next week.
Compulsory job cuts have not been ruled out. AIB said it would “need to consider other options in due course” if the redundancies were not secured voluntarily.
“There is a pretty good chance that we would be able to achieve our objectives on this on a voluntary basis,” said AIB director of human resources John Conway. The bank said the plan will include “actuarially reduced” early retirement, while the terms of voluntary severance would be “consistent with Government parameters”.
Redundancy terms will also be offered to 600 staff at EBS but AIB stressed the increase of 500 job cuts on the figure announced in April 2011 was not to reduce roles at the former building society, acquired by AIB last July.
“The impact of EBS is not significant or a material factor at all,” said AIB spokesman Alan Kelly.
The Department of Finance has said the severance terms must be fair to employees but also reflect the cost to the State of the bank.
The deal offered to Health Service Executive staff of three weeks’ pay per year of service on top of two weeks’ statutory has been cited as the public benchmark. Mr Duffy also told staff AIB was targeting a cut in the cost of consultants. PricewaterhouseCoopers has been working with the bank for more than a year.
