AIB to cut 2,500 staff jobs

AIB bosses are finally about to start slashing an estimated 2,500 jobs.
And sources within the bank say an announcement about the cuts could be made as soon as Tuesday morning.
This is when, at the bank’s HQ in Dublin’s Ballsbridge, its delayed annual results will be published.
It is believed that AIB CEO David Hodgkinson will then make his first public statement on the future for 15,000 bank workers in Ireland and the United Kingdom.
He has already warned staff about job cuts and said that for the bank to survive ‘it will require change of a magnitude never before undertaken by AIB’.
The bank is believed to be looking to make just over 2,500 job cuts but is hoping the majority of them will be voluntary redundancies.
A behind-the-scenes restructuring process has already concluded the cuts to staff are necessary if the bank is to survive, whether or not it ever merges with the EBS.
The bulk of the cuts are expected to be made between now and the beginning of next year. As well as staff jobs going across the board, the bank is also expected to close branches.
An AIB spokesman last night refused to comment about job cuts, or on speculation that €500,000-a-year Hodgkinson will make a statement about them on Tuesday.
A source who asked not to be named said last night: ‘There is an indication that as many as 2,500 jobs will go mainly from its Irish-based operations.
‘Hodgkinson is deliberately keeping his cards very close to his chest on this one, but his recent warning to staff has set alarm bells ringing.
‘We are all expecting a massive round of cuts.
‘Most will involve people losing their jobs outright, while others just won’t work for the bank anymore and will instead be left to the mercy of whoever buys AIB subsidiaries that go up for sale.’
They added: ‘The staff are sick and tired of the constant wait for news and some have heard this is likely on Tuesday.’
Last night, a spokesman for the finance union IBOA said last night: ‘IBOA is seeking agreement from the bank that any redundancies will be implemented on a voluntary basis.
‘And we would want this to be with full negotiation on severance terms with the union.
‘IBOA also wants an agreement on the terms and conditions of staff who will remain with AIB including any transfers and redeployment required under the restructuring of the Group.’
In an email to staff last month, Hodgkinson warned: ‘While there will be job losses, most will be brought about on a phased basis throughout the organization.
‘Our preferred approach is that most redundancies will be achieved on
a voluntary basis.’
Hodgkinson also told staff the bank’s ‘strategic review’ was in its final stages – having been passed to the AIB board.
Department of Finance officials are also believed to be in possession of the report into the review’s findings – and decisions about the bank’s future operations.
Hodgkinson warned that for the bank to survive its current crisis ‘it
will require change of a magnitude never before undertaken by AIB’.
Despite reports last year speculating on the amount of jobs cuts, the bank had always maintained no definite decision about the scale of cuts would be made until after bank stress tests were completed.
Those are now finished, with the Central Bank revealing on March 31 that AIB, Bank of Ireland, EBS and Irish Life & Permanent need an extra €24billion.
AIB will need €5.2billion, this is on top of the €3.5billion it received from tax-payers in 2009 as well as last year’s €3.7billion.
AIB is one of three Irish banks undergoing a new round of European stress-testing.
The other two being stress-tested by the London-based European Banking  Authority are Irish Life & Permanent and Bank of Ireland.
Although results are due in June, it’s worth noting that both AIB and Bank of Ireland passed their EBA stress tests. Two months later they needed to be bailed out again.
IBOA General Secretary, Larry Broderick said at the time that the contents of Hodgkinson’s email had been news to staff and the union.
‘This announcement comes as a surprise to both the staff and to the Union since at no stage in our recent engagement with the Bank has there been any indication that the plan was at such an advanced stage,’ he said.
The Union has been involved in preliminary discussions with the Bank under the auspices of two respected mediators.
‘But at no time ‘were either we or the mediators made aware that the bank was about to submit a comprehensive restructuring plan to the board and to the Government.’
Speculation about job cuts has been rampant since the beginning of the
banking crash in 2008.
AIB confirmed last Friday that the State now owns a 92.8% stake in the bank. This follows the completion of the sale of its Polish businessesBank Zachodni WBK and BZ/WBK AIB Asset Santander in Spain.
Despite upping its stake from 49.9% with last December’s €3.7billion bailout, the Government agreed to wait until the sale was finalised to formally declare its stake holding.
It has also finished converting the 10.5million convertible non-voting shares it received in return for the €3.7million in December into ordinary stock.

AIB staff owe the bank €3billion

THE full extent of AIB’s recklessness became apparent last night when it was revealed that its own staff owe the bank more than €3billion.

Just over €2.5billion of the huge figure is made up of mortgages and home-related loans, while at least €500million consists of other types of credit from their employer.

Shocking as the figures are, bank sources have admitted the sums involved could be even BIGGER.

And as AIB considers redundancies to reduce its costs, the exercise could prove futile, if not impossible, with so much debt tied up with its employees.

One AIB insider last night claimed that around 1,000 employees – out of a total of 12,000 – account for an astonishing €1billion in unpaid mortgage debt.

Some staff on salaries of less than €35,000 reportedly have debts of more than €500,000, thanks to the bank’s profligacy during the boom.

Another employee said: ‘As a member of staff, you were entitled to an almost automatic €20,000 a loan gold credit card, car loans, home improvement loans, overdrafts and, of course, a mortgage.’

The revelations are bound to fuel anger among taxpayers already incensed at being saddled with a €3.7billion bailout over and above the €3.5billion the bank received in public funds in May.

Speculation about the true state of the bank’s finances was raised to new heights last week when Finance Minister Brian Lenihan used the powers vested in him under the Credit Institutions (Stabilisation) Act in making his application to the High Court for the controversial €3.7billion cash injection.

The provision allowed him to exclude the media from the hearing, effectively screening the bank’s massive problems from the public which, some critics believe, is simply being asked once again to throw good money after bad.

Pressure on bank finances has intensified this month after it made a loss of €5.5billion in the sale of €9.3billion of propery development loans to the National Asset Mangement Agency at a 59 per cent discount.

Meanwhile, staff last night alleged that in addition to their perks, they were able to secure further credit from their branch, which would be unaware of what individual employees had received at staff level because of the way separate departments within the bank worked.

Last night, an AIB spokesman said: ‘We cannot comment on staff mortgages or other loans.

‘Staff who are customers are treated the same as non-staff customers.’

But with the bank still needing to raise a further €6.1billion by next February, the fact that such a large chunk of its debt is staff-related will shock many.

And it could prove to be crucial when the Department of Finance and AIB chiefs meet early next year to finalise details of the much-publicised redundancies at the bank.

The December 23 bailout by Mr Lenihan effectively nationalised the bank, in which the State initially has a 49.9 per cent control until the sale of AIB’s stake in Poland’s Bank Zachodni WBK.

Once the deal is completed, the State will end up with 92.8 per cent of the bank, which is to de-list from the main markets of both the Irish and
the British stock exchanges.

With AIB’s mortgage book valued at €27.1billion, insiders at AIB say staff exposure would be ‘in the region of seven to ten per cent’.

One AIB staffer said of the boom times last night: ‘You could pretty much have whatever you wanted. There were few checks done and many of us were able to get multiple mortgages, multiple car loans as well as personal loans.

‘It’s all been tightened up now but people have no idea just how much cash was swilling around in the good times.’

One of the perks the bank admitted to last year was the availability of 100 per cent mortgages for staff members who were first-time buyers.

The mortgages – condemned by TDs as inappropriate at a time of growing economic uncertainty – were being offered as part of a ‘special package to staff ‘.

UCD economist Morgan Kelly has warned that Irish banks could end up ‘drowned’ by the losses on mortgages.

Bank workers’ union the IBOA is so concerned about the increasing ‘anecdotal’ evidence of its members’ debts that it ordered a survey earlier this month.

The Financial Regulator has received a number of complaints about the way the bank is dealing with staff debt.

An anonymous AIB whistleblower has lodged complaints with both the regulator and the Department of Finance, and a string of serious allegations are now being investigated.

They include a claim that staff have been allowed to have mortgages more than 20 times their salary.

An IBOA spokesman said: ‘We are very concerned and feel it’s now time to get a better assessment of the problem.’