Bank set to shed 2,000 jobs in bid to cut costs

BANK of Ireland is expected to announce this week that it is to shed 2,000 jobs as part of cost-cutting measures.

The bank is expected to give details of large-scale job losses at its back-office operations.

It employs 12,000 people in Ireland and almost 18,000 in total. The cuts will affect around 15% of the workforce and are expected to save the bank around €130 million every year in pay costs.

Crunch time is expected tomorrow, when the bank releases a regular trading statement to the Irish stock exchange.

Chief executive Brian Goggin flagged plans for an overhaul before Christmas, saying he planned wide-ranging action to cut costs and reduce the bank’s cost-income ratio, a key measure of profitability, to less than 50%, in line with industry norms. The markets punished the bank’s share price last year on news that the bank was having more trouble than expected in addressing its cost base.

Mr Goggin has promised “very visible” action to slash costs and is understood to favour a repeat performance of an IT contract with computer giant Hewlett Packard that was negotiated by his predecessor, Michael Soden, and which off-loaded 300 staff from the bank’s payroll.

But there is also considerable scope to eliminate wide-ranging duplication caused by many of the bank’s businesses which operate as stand-alone entities. Many have their own independent finance, human resources, marketing and IT operations.

The bank has already taken steps to address this by merging a number of finance departments, call centres and similar units. But it lags industry leaders, such as Ulster Bank parent Royal Bank of Scotland, which has taken centralisation of back-office activity to levels never seen before. Bristol & West, the bank’s mortgage lending subsidiary in Britain which has disappointed in recent years, is also in the firing line.

There may also be indications of job culls at branch level, but Mr Goggin has already made public his view that previous attempts to cut the number of front-line staff had misfired. But the Bank of Scotland’s takeover of the ESB’s ShopElectric chain of retail stores last week, to create a branch network of its own, may have forced a rethink.

Bank of Ireland made profits of €1.27 billion before tax last year. Staff affected by the cuts are in line for redundancy payments.