Ulster Bank is planning to eliminate 175 manager positions in an effort to cut costs as ultra-low central bank rates and Brexit uncertainty weigh on the banking sector.
The biggest shake-up since chief executive Jane Howard took charge 15 months ago was announced internally staff on Wednesday morning. A spokeswoman for the bank confirmed the plans. The targeted roles, by way of a voluntary severance scheme, account for 25 per cent of the company's total 700 manager positions.
"As we simplify our processes and improve our service, the management structure we've built is unnecessarily complex, therefore today we opened a voluntary redundancy scheme for our manager colleagues," Ms Howard said in a statement. "Our strategy is to serve our customers digital-first, supported by our colleagues on the front line."
The move comes a little over two months after Ms Howard told The Irish Times in an interview that her executive team was working on a fresh round of job cuts, as lower-for-longer European Central Bank rates mean that “the lever we are going to have to pull is cost”.
Excess liquidity
Irish banks, which struggled to hold on to deposits during the height of the financial crisis, are now holding excess liquidity as many customers are more intent on saving than taking on new borrowings, particularly amid uncertainty over Brexit. Mortgage-lending limits are also constraining the growth of banks’ loan books.
The ECB is charging banks a rate of minus 0.5 per cent for excess funds that they deposit with the euro zone institution.
Gareth Murphy, head of industrial relations and campaigns at the Financial Services Union, said his organisation is concerned that the planned departures will add to the workload of remaining employees.
“We know that stress and pressure remain a serious issue in the sector and we are concerned that accepting too many voluntary partings from this population will exacerbate this critical issue,” he said.
Ms Howard said two months ago that job reductions would also be driven as Ulster Bank’s systems and processes are simplified over time and it takes greater advantage of its parent’s technology. The bank is part of Royal Bank of Scotland.
Problem loans unit
The bank had previously flagged that its 400-strong problem loans unit will be one of the areas targeted for job cuts as the bank continues to lowered its mortgage-arrears cases through loan sales and restructuring efforts.
Ulster Bank moved in early 2009 to become the first retail bank in the State to cut jobs and branches at the start of the financial crisis. It has since eliminated more than 1,000 roles as the size of its balance sheet shrank by half, leaving it with an average of 2,368 staff and 247 temporary employees at the end of last year.
The bank has reduced its number of branches in the Republic from 190 before the crisis, including now-defunct First Active locations, to 88, currently. Sources said that the bank has no plans to further cut its network and that branch managers are not included in the current voluntary redundancy offer, which opened on Wednesday and will close on January 8th.
The bank’s costs stood at 90 per cent of income in the third quarter of this year, according RBS’s latest financial report. While it was down from ratios of 105 per cent in the second quarter and almost 111 per cent for the corresponding period last year, banks typically target a ratio of about 50 per cent.
AIB, Permanent TSB and Bank of Ireland are also planning job cuts over the coming years.
It comes at a time when lenders in Ireland and elsewhere are investing heavily in their information technology (IT) systems. The wider European banking sector has announced plans so far this year to cull more than 60,000 positions.
