The US bank which last year agreed to buy AIB's troubled Allfirst subsidiary, plans to lay off 1,132 Allfirst staff in a $40 million (€37.9 million) severance programme.
The staff cuts, which will reduce Allfirst's workforce by 20 per cent, form part of M&T's plans to integrate the Baltimore-based bank into its corporate structure. They will mostly affect areas in which the two institutions would see duplication of roles.
The severance programme will result in 657 job losses in Baltimore, the Allfirst headquarters where the $691 million fraud perpetrated by rogue trader, John Rusnak, was discovered last year.
M&T spokesman, Mr Michael Zabel said marketing, human resources, IT, finance and legal departments would be the worst affected. Allfirst currently employs 5,553 staff, all of whom have been informed of the redundancy situation.
M&T agreed to take over running Allfirst in a $3.1 million merger deal last September. AIB will receive a 22.5 per cent shareholding in M&T as part of the merger, which is expected to conclude in March.
AIB signalled at the end of last year that it would be taking a $35 million charge in respect of merger and its consequent integration costs.
Mr Zabel said the jobs would be "phased out" in three waves over the coming 12 months. About one quarter of affected staff will leave Allfirst within 60 days.
All employees who have direct contact with the public on a day-to-day basis will be retained, according to the spokesman.
Severance payments will vary according to service, but some longer-serving employees could receive up to 52 weeks' salary. They will also be offered life assurance and health benefits throughout the severance period.
As part of the overall integration process, M&T plans to begin creating 557 new positions within the group as soon as the deal with AIB is completed next month. Buffalo, New York-based M&T currently employs about 9,000 people.
Those Allfirst staff whose jobs are being cut will be given "priority consideration" for the new positions, Mr Zabel said. About 50 per cent of the new jobs will be created within "the Allfirst community", Mr Zabel said.
Allfirst's operations extend to Pennsylvania and Delaware.
Marlyand-based banking analyst, Mr Lew Sosnowik, said it was not surprising that M&T would seek to reduce costs as the deal with AIB neared completion.
"This is the way things work in any kind of a merger," said Mr Sosnowik, noting that all banking mergers tend to involve some kind of "overpayment" which must subsequently be made back.
Mr Sosnowik believes there may be more job losses to come as the integration of Allfirst with M&T proceeds.
