ALBK ' s loss over 10b euros. Tested 0.22 today.. BKIR sliding today and tomorrow. If better results than ALBK, may rebound..
AIB planning to cut 2,000 jobs
AIB's loss increased to EUR10.4 billion, up from EUR2.3 billion a year earlier, according to a statement today. Photograph: PAAIB's loss increased to EUR10.4 billion, up from EUR2.3 billion a year earlier, according to a statement today. Photograph: PA
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External
* AIB statement
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ÉANNA Ó CAOLLAÍ
Allied Irish Banks is to cut over 2,000 job after posting a record €10.4 billion net loss on continuing operations last year.
The bank's loss increased from €2.3 billion in 2009.
In a statement released this morning, the bank – which is 93 per cent Government-owned - said costs must be lowered as business and market conditions remain challenging and the environment for operating income generation "remains difficult".
"It is expected that a reduction of over 2,000 staff will take place on a phased basis over 2011 and 2012," the bank said.
AIB's share price was down almost 12 per cent at 3pm, trading at €0.22.
Speaking this morning, AIB executive chairman David Hodgkinson said the losses were largely due to poor quality loans where the bank did not expect repayment.
AIB’s deposits fell by €22 billion to €52 billion last year and the bank lost €7 billion on loans it transferred to the National Asset Management Agency (Nama), and a €6 billion impairment charge on other bad loans.
Most of these loans are property-related, Mr Hodgkinson told RTÉ's Morning Ireland. He said the bank's deposit outflows have "lessened" and "stabilised" in the early part of this year.
Mr Hodgkinson said the news of the bank's recapitalisation had been positively met by the market and added he hoped that might represent a turning point for the institution. He said the "bulk" of the loan problems are based in the Republic of Ireland and are property-related.
He said the provision of a "significant amount of capital" in the form of the Government bailout gives the bank the "firepower" to help borrowers in difficulty. "What we want to do is engage with customers who are in difficulty, talk to them, understand their position fully and try and agree a solution with them."
Mr Hodgkinson said the job cuts will be spread across the organisation. “The bank as a whole has to slim down from the size it was,” he said, adding that he expects the “vast majority” of redundancies to be on a voluntary basis.
He said the bank should be "reasonably generous" when it comes to severance packages as people "are losing their jobs and their livelihoods".
Minister for Public Sector Reform and Expenditure Brendan Howlin said it was a bleak day for bank workers. “It is clear that there is going to be a considerable downsizing of the banking sector in Ireland, that’s true and that will involve job losses,” Mr Howlin said. “It already has involved job losses for an awful lot of people. I think what people want now generally is some level of certainty.”
Mr Howlin said the decision to restructure the banking sector was the beginning of that process.
Irish Bank Officials Association (Iboa) general secretary Larry Broderick said the job losses were the equivalent of a major multinational pulling out of the country and warned that the Government’s plans to restructure the banking sector could impact around 6,000 workers.
“I would have thought, given the seriousness of this and the fact that the vast majority of staff are not responsible for the mess that AIB is in, that courtesy would have been given to them and they would have been advised in advance,” he said.
Mr Broderick called for a meeting with Taoiseach Enda Kenny and Tánaiste Eamon Gilmore over the banking sector plans. “This is a major, major blow for many, many families in Ireland today,” he said.
Mr Hodgkinson said in the future, the bank will have a focus on the domestic market and on some businesses in the UK. On recent and anticipated ECB interest rates and, he said AIB would "aim to be quite fair" about how rate changes are passed on.
The speed at which AIB recovers and returns to a position of profitability and self-capitalisation is heavily influenced by the country’s economic prospects.
Mr Hodgkinson said he was "quite positive" about Ireland's long-term economic outlook. "Ireland has some very powerful competitive advantages, Its an open economy. It is very attractive to international businesses. It has a good education system and a good workforce," he said.
"Ireland's costbase has already improved dramatically for business. So really for me, it's in part a return of confidence that's needed."
