Redundancies on the way at Irish banks?

The developing trend in Ireland's financial services is 'be grateful for what you have' and many are weathering the storm by staying put. And why not? A recession is officially upon us and the number of new jobs appears to be shrinking. But this tactic could make things worse.

After a shaky couple of weeks involving international banking collapses and mergers, Irish workers in domestic institutions won't exactly be buoyed by recent rumours.

Bank of Ireland was quick to quash any talk of a link-up with RNS Santander, while there's the suggestion that Anglo Irish Bank could make a move on Irish Nationwide Building Society.

Even if mergers aren't on the horizon, things aren't exactly looking up for Irish banks anyway, who have seen their ratings slashed by Standard & Poor's due to their high exposure to the floundering commercial property market.

Bank of Ireland has said that the last few months have hit it hard and many are predicting this to continue going into 2009.

Over 25,000 people are now employed in Ireland's financial services sector, which is a 2.6% increase on last year. Still, it's obviously slowing down - the numbers employed in 2007 rose by over 16% on 2006, according to figures from the Finance Dublin Yearbook.

So far the number of jobs losses seems to be keeping to a minimum. Ireland's stockbrokers have already been trimming staff, with Davys letting go of 70 employees, while NCB axed 10. On the retail banking side, HFC Bank closed seven branches, which resulted in 41 jobs being axed.

Considering that the number of jobs in Ireland as a whole in August was down 37% on the same period last year, financial services is relatively unscathed. For now, at least.

Tommy Conway, the head of equities with stockbrokers, NCB, reckons there's "no doubt" that there will be more job losses in the Irish banks - if only because natural attrition will be lower as more people stay put.

He also reckons the "non-existent" appetite for loans will inevitably continue to hit the banks' bottom lines, leading to redundancies.

But mergers could be good news for the banks, if not jobs, he adds: "If mergers amongst Irish banks led to a more robust banking sector, that would be good for the economy in the current uncertain environment, even though it would result in job losses in the short-term."