AIB to cut 2,500 staff in effort to reduce costs

AIB will today announce it is to cut 2,500 jobs as part of an ongoing programme by the State-owned bank to reduce overall costs.

The bank refused to outline where jobs are to be axed, or what branches will be affected ahead of an announcement to be made to staff this morning.

Industry sources expect AIB workers will be offered a deal that was similar to that offered to HSE workers last year — three weeks’ pay per year of service plus the statutory redundancy payment of two weeks.

The package on the table will be open to workers across the group. Remaining staff may face pay cuts and branch closures down the line.

IBOA, the finance union, has previously said that it would not accept anything less than the deal that was agreed between staff and Bank of Ireland. Staff in the State’s other pillar bank were offered four weeks’ redundancy as well as the statutory two weeks, a week more than the AIB offer.

The IBOA spent yesterday frantically seeking meetings with both the Department of Finance and AIB senior management after it emerged the number of staff to be laid off is to rise to 2,500. The figure is 500 higher than had been previously expected as the merger between AIB and EBS in July created a duplication of positions in the two State-owned institutions.

The union’s general secretary Larry Broderick said he was awaiting details from the bank about the job losses.

“The IBOA is unable to comment on the accuracy of the recent speculation since the bank has yet to provide us with details of its proposals. The union is, therefore, seeking these meetings in order to clarify the future direction of the bank and the likely implications of any change for staff and customers.”

The news of the massive job losses at AIB comes as close to 3,500 people queued at the Silversprings Moran Hotel in Cork for the Working Abroad Expo.

The latest CSO Quarterly National Household Survey also found the numbers at work in the last quarter of 2011 increased for the first time in four years. However, the unemployment level held steady at 14.6%.

At the end of 2010, the two banks employed almost 15,000 people between them. AIB had 14,255 employees while EBS had 616.

The State has already injected €20.7bn into AIB and EBS, resulting in the companies being 99.8% nationalised. The banking sector in Ireland has cost the taxpayer €62bn in the past three years.

Ireland’s bank bailout was described as the “cheapest bank bailout in history” by former finance minister Brian Lenihan.

More recently, a former adviser to Mr Lenihan, economist Alan Ahearne, described the size of the bailout as a share of the Irish economy as “unprecedented”.

Despite the capital investment in AIB, the company’s loan book continues to post massive losses. In April, the bank posted a record €10.4bn net loss as a result of soaring bad-loan losses.

The continued losses in Irish banking have resulted in the sector shedding 6,000 jobs since the property bubble burst in 2008.

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