Banks face union pressure on staffing of bad-loan units

The Financial Services Union (FSU) has written to banking chiefs to press them on how they plan to staff bad-loans units amid an expected surge in arrears cases as a result of Covid-19, at a time when industry workers are reporting high-stress levels.

It comes after the Central Bank of Ireland outlined on Tuesday that it wants banks, which have granted 140,000 temporary loan breaks to households and companies, to file detailed plans on how they will deal with extensions of such relief to six months as well as their approach to customers that will not be able to return to their normal loan-repayment schedules afterwards. The plans must include details on staffing.

The FSU called in letters to the State's five banks on Wednesday for "immediate" executive meetings as it seeks commitments that any redundancy plans be frozen for 12 months, no new loans-management work to be outsourced and that any internal redeployments be agreed before submissions are made to the Central Bank.

“The banks will have an important role supporting customers and the economy in a very challenging time,” said FSU secretary general John O’Connell. “Appropriate staffing levels will be very important and we will obviously be seeking a freeze on any plans to reduce headcount at this time. It is very important that the banks signal a willingness to genuinely embrace a new culture, which is inclusive of staff and conscious of the best interests of customers.”

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Four of the five lenders were working on job-reduction plans before the Covid-19 crisis struck, as they sought to rein in costs as ultra-low official interest rates and muted loan-book growth squeezed incomes.

AIB, which has almost 1,500 working in its problem-loans unit, and Ulster Bank, whose arrears division employs about 400, had expressly targeted these areas for initial job cuts. AIB has since pressed the pause button on its plan, but still expects to cull 1,500 positions across the group by 2022.

Losses on restructuring loans

AIB, Ulster Bank and Bank of Ireland set aside more than €500 million in the first quarter for expected loan losses. Analysts at Davy and Goodbody Stockbrokers estimate that Covid-19 will lead to AIB, Bank of Ireland and Permanent TSB stomaching more than €4 billion of loan impairment charges over three years, including expected losses on restructuring loans.

The FSU has also written to Central Bank deputy governor Ed Sibley asking him to encourage banks to engage with the FSU before submitting plans to the regulator.

“It is imperative that each bank engages with us to agree the staffing and employee implications prior to any submission by them to you,” said Mr O’Connell in the letter seen by The Irish Times.

“We have been monitoring matters for our members. And a recent survey of almost 5,000 staff across retail banking shows staff in significant numbers reporting working beyond contractual hours and experiencing stress as a result of this and the intensification of work.”