AIB: Market conditions still difficult

Allied Irish Banks (AIB) is to axe more than 2,000 jobs by the end of next year, it has announced.

The group recorded a €10.4bn loss last year and claimed business and market conditions remained difficult.

It said costs needed to be lowered, with staff to go on a phased basis during 2011 and 2012.

AIB and EBS are to merge and become one of the country's two pillar banks, as announced by the Government in their banking restructuring plans.

In a statement this morning, the bank said the merger will form a strong foundation from which a profitable business can be rebuilt.

AIB employs around 12,000 staff through its Irish divisions, with another 2,507 in its UK operations.

The bank said the commitment of further state support highlights its systemic importance to the domestic economy.

“The very strong capital base that will result from the generation of €13.3bn of capital will enable AIB to provide long-term support to its customers and play an active role in the recovery of the Irish economy,” the bank said in a commentary on the results.

Some €7.2bn in state support has already been pumped into the bank.

The €10.4bn loss last year compares with €2.3bn in 2009.

AIB, once Ireland’s largest bank but now 92.8% state-owned, needs another €13.3bn bailout after the results of long-awaited stress tests.

The Government plans to shrink the state’s creaking banking sector from six homegrown lenders to two so-called pillar banks.