Headcount shrinks, but AIB still holds off making redundancies

AIB staff have the government to thank for the fact that the bank has yet to announce any redundancy plans, in spite of posting a €872m for the first half of 2009. However, headcount is down since the beginning of this year, bonuses have evaporated and hiring is still non-existent.

The results were predictably bleak - a €872m loss for the first six months of 2009, compared to a €1.04bn profit the same time last year - largely down to a €2.37bn impairment charge.

Not surprisingly, therefore, it's keeping a close eye on costs, and those associated with employees have dropped by 9% year on year over the first half to €654m. While the bank admits there has been a "widespread reduction" in staff numbers and lower variable compensation, it says it hasn't implemented any redundancy programmes.

Since December 2007, staff numbers have reduced by 1,725.

A spokesperson tellsus this is down to a combination of not replacing staff who leave, a headcount freeze, and its 'Time Out' programme where staff are invited to take unpaid or reduced paid leave for as long as six weeks.

AIB's UK operation saw the deepest cuts - a 13% reduction in personnel costs - while the Republic of Ireland operation shrank its expenses by 9% "on the back of reduced staff numbers".

The wage bill for the bank has shrunk by 16%, to €502m, reflecting the smaller bonuses.

"We expect the operating environment to remain extremely difficult through the remainder of 2009," said the bank in a statement. "Customer loan demand is weak and there is continuing strong competition for deposits. We maintain an active focus on costs in this difficult revenue generation environment. The establishment of NAMA will be a material event that will influence the future outlook for the bank."

Lloyds Banking Group, which also reported its first half earnings today, revealed it has written off more than 1bn on bad loans related to its Irish operations.