AIB to seek 150 job cuts over three years

AIB informed staff on Friday that it is planning to cut 150 jobs over the next three years, which would reduce its workforce to about 9,875.

“Following consultation with the Financial Services Union, we are proposing a maximum of up to 150 redundancies on a voluntary basis over the next three years,” a spokesman for the bank said.

It is understood that the bank will initially target its problem loans unit, or so-called Financial Solutions Group (FSG), which was set up during the financial crisis and once had 1,500 employees at its peak. The division currently has about 300 employees and it is envisaged that this will be reduced by about 50 over the coming years.

“The voluntary redundancies planned are in areas where we can increase efficiency and automation or where fewer colleagues are required given that legacy issues have been largely resolved,” the spokesman said. “We are committed to ensuring services for customers will be maintained at existing levels.”

John O’Connell, general secretary of the Financial Services Union (FSU), said the planned redundancies was short-sighted and “based solely on their profit margins”.

“If we continue to let individual banks manage the future of our banking services we will be left with a continual withdrawal of banking services which will result in consumers and businesses suffering the consequences,” he said.

AIB set out in early 2020 to cut 1,500 jobs – or 16 per cent of its then workforce – in order to keep costs in check as Irish banks’ earnings were being squeezed in a prevailing environment at the time of low interest rates and muted demand for loans.

However, it subsequently paused the programme during the Covid-19 pandemic and ultimately abandoned completing it as the remaining three banks sought to cope with a surge in new customers as Ulster Bank and KBC Bank Ireland retreated from the market.

AIB took on some 280 former Ulster Bank employees as part of a loan portfolio purchase from the UK-owned lender. AIB also moved two years ago to hire as many as 700 temporary staff to help manage a deluge of Ulster Bank and KBC Bank Ireland customers looking to open new accounts. A significant number of these were kept on, according to sources.

AIB’s customer base rose by 500,000 last year to a record 3.3 million. It currently has 10,025 employees. That excludes 387 staff working in its Goodbody Stockbrokers unit and a further 115 employed by its Payzone payment services business.

AIB chief executive Colin Hunt’s renewed focus on costs come as analysts see the bank’s earnings falling over the coming years from record levels in 2023, when central bank rates peaked.

Jordan Bartlam, an analyst with Italian investment bank Mediobanca, recently cut his forecasts for AIB, for example. He sees AIB’s underlying pretax profits, which soared 130 per cent last year to a €2.56 billion, falling gradually by more than 30 per cent by 2026.

The European Central Bank (ECB), which raised its key deposit rate from zero to 4 per cent in the 15 months to last September, moved last month to shave a quarter of a percentage point from the rate. Short-term debt markets are currently pricing as many as two further cuts by the end of this year as inflation continues to ease.

The deposit rate has being a big driver of AIB profits, as the bank had about €33 billion of excess cash on resting in the Central Bank at the end of last year.