ANALYSIS:Redundancies are in the wake of many thousands of staff who have already left
THE 950 job losses at Ulster Bank are a further sign of the fallout from the financial crisis as lenders cut costs to cope with the dramatic collapse in business and the higher cost of running banks.
Ulster Bank, which is owned by the mostly nationalised UK lender Royal Bank of Scotland, has tackled payroll costs through redundancies much more aggressively than its biggest rivals, Bank of Ireland and Allied Irish Banks.
Following the latest round of redundancies, the bank, one of Ireland’s top three mortgage lenders, will have shed 1,950 jobs out of 7,000 or 28 per cent of its workforce since the onset of the crisis.
Ulster Bank was one of the first to announce major job cuts under former chief executive Cormac McCarthy with 750 redundancies in early 2009, later rising to 1,000.
The latest 950 redundancies are being managed by the new chief executive, New Zealander Jim Brown, who was installed by RBS to succeed McCarthy in April 2011. Applying the same swingeing cuts proportionately to Bank of Ireland and AIB, this would amount to the job losses of about 4,000 at each of the State-backed banks.
So far some 350 people have left Bank of Ireland under a redundancy plan announced in July 2010 that targeted 750 jobs, while AIB still has to identify 2,000 roles that it plans to make redundant.
This will be one of the first tasks facing AIB’s new chief executive David Duffy who started in his job last month. He will meet the Irish Bank Officials Association shortly to discuss the redundancies.
The job losses at the banks are on top of the many thousands of staff who have left voluntarily outside redundancy programmes.
For example, about 2,700 staff have left Bank of Ireland’s payroll since March 2008 through departures and the sale of businesses.
The IBOA says that 6,000 jobs had already been lost in the financial services sector. Larry Broderick, general secretary of the IBOA, is expecting a further 4,000 job losses across the banks this year, including 2,000 at AIB.
Uncertainty surrounds the future of 300 staff at Aviva who worked at Arklife, the insurer’s life and pensions joint venture with AIB. The bank is ending the joint venture and the jobs are moving to AIB, which is about to agree an alternative tie-up with Irish Life.
Irish Bank Resolution Corporation, formerly Anglo Irish Bank and Irish Nationwide, closed applications for its redundancy plan yesterday and expects to see 350 jobs going over the course of this year. The dysfunctional state of banking makes all this necessary.
Margins are being squeezed as banks must pay up for deposits and other funding on top of paying costly fees to the State for a guarantee. Coupled with plummeting business volumes, this means costs must be reduced sharply.
New mortgage lending has fallen from a high of €40 billion in 2006 when the property bubble was at its most inflated to about €2 billion last year as the number of new mortgages falls to levels last seen in the early 1970s.
The bulk of the latest redundancies at Ulster Bank fall in the retail and corporate banking divisions where lending to mortgage borrowers and developers was grown to rival Permanent TSB and Anglo Irish Bank in those sectors.
