Bank of Ireland plans to shed up to 750 jobs over the next two years in its biggest cost-cutting move since the State’s €3.5 billion cash injection last year.
The lender, which is now the largest Irish bank by market capitalisation, is to reduce its 14,600-strong workforce by 5 per cent through voluntary redundancies.
The bank said today it anticipated the reduction could be achieved “in areas affected by business change” across the group in the Republic, Northern Ireland and Britain.
The European Commission yesterday approved the bank’s restructuring plan, which includes a plan to dispose of New Ireland Assurance, its life and pensions division; Bank of Ireland Asset Management; and ICS Building Society.
"Within the plan are objectives to ensure that the bank becomes more focused and efficient," the bank said.
Following discussions with the Irish Bank Officials' Association (IBOA), the bank said it had agreed a series of proposals, recommended by mediator Mark Connaughton SC, regarding pay and job security for bank staff.
These included maintaining the existing pay freezes until April and December of next year, when further reviews are scheduled.
Bank of Ireland had a total of 14,636 employees at the end of December, according to its annual report. About 2,200 people have left the lender since March 2008 - mostly as a result of the lender not replacing employees as they left the group.
The State holds a 36 per cent stake in Bank of Ireland, following its recapitalisation.
In its statement this morning, the bank said it was strongly committed to consulting with staff and their representatives throughout the process.
IBOA general secretary Larry Broderick said staff at the bank were being asked to pay a high price for the mismanagement, not only in the form of substantial job losses but also in changes to pension benefits and restrictions on pay.
The union will be scrutinising any specific proposals for job reductions with a view to securing alternative arrangements wherever possible, he said.
"It is incumbent on senior management to learn the lessons from past mistakes in order to bring about a fundamental change in the culture that has operated in Bank of Ireland and brought it to the brink of collapse.
"While the prospects for Bank of Ireland look better now than they have for some time, this will be a false dawn unless there is a restoration of traditional banking values such as prudence and integrity - which underpins an approach to customers which places a premium on consistent service rather than short-term profit," he said.
The IBOA's executive will meet next week to review the EU Commission report together with the mediator's recommendation - in preparation for further talks with the bank's management.
Additional reporting Bloomberg