Bank of Ireland plan to cut 1,400 jobs leads to call for Government intervention
A Bank of Ireland plan to cut 1,400 jobs to curtail costs has led to a trade union call for Taoiseach Micheál Martin to intervene amid fears the lender also plans to close branches.
The surprise announcement comes as the bank posted a loss of €669m in the first six months of the year, after chalking up €937m in credit impairments for the costs so far of the Covid-19 hit on loans to households, corporates, and small firms.
The impairment costs will likely increase to between €1.1bn and €1.3bn over the full financial year, the bank said, under the assumption that any flare-up in the Covid health emergency doesn’t derail the start of an economic recovery.
Like most lenders, Bank of Ireland has been struggling over curtailing costs and has sought to catch up by investing in digital services.
Chief executive Francesca McDonagh said the bank has for some time signalled it would bring staff numbers to below 9,000 from the 10,300 people it currently employs, as demand rises for its digital banking services.
She said there was “no read across” from the 1,400 voluntary redundancies to Bank of Ireland closing any branches.
The bank nonetheless devotes resources and needs to respond to the needs of customers “and increasingly that is online”, she said.
The plan for redundancies was “fair and appropriate”, she told the Irish Examiner.
Bank of Ireland has 244 branches in the Republic and 28 branches and six business centres in the North, where it has also ordered a separate review of its operations. It also has other significant lending operations in Britain.
It has already closed branches at university campuses and hospitals because of reduced demand during the Covid crisis and won’t renew at Cork and Dublin airports because of declining business.
However, Financial Services Union secretary-general John O’Connell said he fears the redundancies will entail the closure of branches in rural Ireland and has written asking Taoiseach Micheál Martin to intervene to get Ms McDonagh to think again.
“Any redundancies could potentially lead to branch closures. This is why we need to see a pause now on proposals to allow for an examination of the full effect of redundancies," Mr O’Connell said.
Asked whether Ireland was facing another mortgage arrears crisis, Ms McDonagh said that the €937m impairment charges include €184m for accounts who have not been able to resume their payments after the payment breaks.
She said the full-year forecast of up to €1.3bn in impairments was based on “a deep contraction” of GDP of 7% and an unemployment rate of 13.5%, and a recovery getting underway later this year.
Based on evidence of financial transactions as most parts of the economy re-opened, the bank was slightly more optimistic about the economic prospects than it was in May.
She said that the €2bn credit-guarantee loans scheme which is 80%-backed by the Government was “appropriate”.
