Ulster Bank first of the financials to shed jobs

ULSTER BANK is to axe 750 jobs and is to merge First Active, its mortgage and investment business, into its general banking operations in the south.

These are the first job losses to be announced in the struggling banking sector undermined by the credit crunch and the slump in the housing market.

It will mean the end of the First Active brand which was acquired by Ulster in 2003. Under the plan, 550 jobs will go in the Republic and 200 in the North.

The redundancies will be across the board in Ulster Bank Group, a spokesman said, adding that “no set target for job losses in First Active has been set”.

First Active employs up to 400 staff in its 60 branches. Ulster Bank employs a total of over 7,000 people north and south and expects to have the merger completed by the end of 2009.

The group currently has 342 branches across the island, including business centres, and will end up with 295 when the process is completed. Of those, 192 will be located in the south.

The plan involves the amalgamation of 45 First Active branches into Ulster Bank branches and 15 others converting to Ulster Bank units in locations where it does not already have a presence.

A statement from the bank said the changes reflect the need “to adapt to prevailing market conditions, while strengthening the organisation and its all-Ireland reach”.

The shock announcement triggered a spate of calls to First Active from anxious savers worried about the security of their savings.

First Active and Ulster stayed out of the Irish bank guarantee scheme but a spokesman said investors have the protection of the British government who now owns 70% of Royal Bank of Scotland, who in turn control Ulster Bank.

Cormac McCarthy, chief executive of Ulster Bank, said he was confident a deal can be reached among the banks’ employees and all the redundancies would be voluntary.

“Discussions will be held in the coming weeks to ensure the best results for everyone,” he said. “We’re doing this in a spirit of co-operation. Out of 7,000-plus people I would expect to get 750 volunteers. We will work with the unions, We have a good package, that makes a difference.”

Trade unions warned workers would not be made the soft target for the mistakes of the bankers.

General secretary of the Irish Bank Officials Association, Larry Broderick, said bank staff were being scapegoated for “the mismanagement, incompetence and greed of senior management in the parent company”.

Siptu’s Owen Reidy questioned Mr McCarthy’s optimism. Describing the job cuts as crude, Mr Reidy insisted the group would have to put its full proposals on the table before his union would start negotiations.

Difficulties with Royal Bank of Scotland are believed to be at the centre of the retrenchments in Ireland.

However, Mr McCarthy rejected that view.

“The regional markets, of which we are part, continue to trade profitability. We work within that and we’re running this business on the island and that’s what we’re doing,” he said.

Ulster Bank and First Active contributed €376 million in earnings to the group in the first half of last year.