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AIB plans to cut 1,500 jobs, close some of its branches and withdraw much of its loans in the UK as part of a cost-saving measure.
It comes as Moody’s warned of a negative outlook for European banks next year.
Financial institutions will have to deal with a slow economic recovery, rising problem loans and weakened profitability prospects, according to the rating agency.
To counter this, banks will accelerate cost reduction and digital investments, Moody’s said in a report released yesterday.
AIB, backed by the state, will restart its voluntary layoff program early next year, which had been halted in March. It is expected to be completed in 2023.
John O’Connell, general secretary of the Financial Services Union, said the announcement of the layoffs “is untimely and should be postponed.”
“We are still in the midst of a global pandemic. No major announcements about job cuts should be made at this stage, particularly by a bank that is partly owned by the Irish government,” O’Connell added.
AIB plans to merge a small number of branches in Dublin, Cork and Galway in the first half of next year.
Branches to be closed include AIB’s Westmoreland Street operations in Dublin, Eyre Square in Galway, and the Patrick Street branch in Cork.
The Covid-19 pandemic has rapidly accelerated customer preference for digital banking, according to the bank.
The bank said it has seen a 27% increase in daily digital use among customers over 65.
In the future, branch services will continue to evolve “towards sales and consulting,” AIB said.
AIB has also reassessed its future Dublin head office requirements, these buildings currently account for 50% of its total cost of ownership.
AIB earlier this week completed the departure of its former headquarters in Bankcentre, Ballsbridge and will leave the adjacent facilities at Hume House by the end of the year.
With 80% of its staff working from home since the onset of Covid-19, it plans to vacate another three of the six remaining Dublin headquarters locations as leases are renewed in the coming years.
In the UK, AIB’s future focus will be to lend to companies in the renewable, infrastructure and manufacturing sectors; the bank will abandon lending to small and medium-sized businesses in Britain.
AIB CEO Colin Hunt said: “Our strategic plan, to be implemented over the next three years, has been influenced by the accelerating effect of Covid-19 on customer preference for digital banking and new emerging trends in how and where our people work. “
“Our increased focus on cost controls, the pursuit of new growth opportunities and our investment in digital innovation will enhance the range of financial products and services for our clients, while generating value for our shareholders and placing the bank on an even stronger footing. solid to meet the challenges that lie ahead, ” he added.
The bank seeks to save additional costs of 150 million euros per year, as it aims to reduce operating costs to 1.35 billion euros annually by 2023.
In March, the bank said it was targeting 1.5 billion euros of annual costs, excluding one-off items, in its medium and long-term targets.
The bank is also targeting a return on tangible capital (ROTE), a way of measuring profitability, of more than 8% by 2023.
In June, AIB announced a huge € 1.2 billion impact on its balance sheet from the Covid-19 pandemic.
Impairment is overwhelmingly prospective and is driven by financial models rather than realized losses.
It gave the bank a pre-tax loss of € 909 million for the first six months of the year.
Online editors
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