AIB Weighs Offering New Voluntary Job-Cut Program for Bankers
(Bloomberg) -- AIB Group Plc is considering a new job-cutting plan that would offer staff payouts to exit, according to a person familiar with the matter, as the Irish bank seeks to pare costs.
The state-owned lender is weighing whether it needs a new round of job reductions or if its current hiring and promotion freeze will sufficiently reduce expenses, according to the person, who asked not to be named because the matter is private. The company is likely to make a decision by the end of the year, the person added.
“The bank continuously reviews our resourcing requirements, and voluntary severance is one solution offered to meet these requirements in certain areas,” AIB said in an emailed response to questions.
Irish banks are grappling with headwinds ranging from Brexit to the European Central Bank‘s “lower for longer” interest rate policy -- as well as a mortgage overcharging scandal in their home market. Royal Bank of Scotland Group Plc’s Ulster Bank is planning more job cuts in Ireland, the Irish Times reported on Friday.
AIB currently has about 10,000 staff, down from 25,000 in 2007, before the real estate crash that almost wiped out the lender and left it needing a government bailout. Ireland retains a 71% stake in the bank.
About a fifth of the bank’s staff are working on legacy issues, such as mortgage holders who are in arrears. The bank is offloading bad loans, with another sale -- known as Project Alder -- due to be completed by the end of November, according to the person.
The Irish government sold almost a third of AIB in 2017, but the shares haven’t traded above the 4.40-euro initial public offering price since October. Meanwhile, expenses are creeping higher: the bank reported a cost-to-income ratio of 54% for the first half of 2019, up from 53% at the end of 2018.
The lender’s pretax profit almost halved in the first half of this year. AIB shares have slumped by about a quarter since the start of July, making it the worst performer in the Euro Stoxx Banks Index this quarter. Bank of Ireland Group Plc, which postponed a bond sale earlier this month, is down 23% over the same period, with both banks hurt by the growing threat of a no-deal Brexit.
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