Jobs at Bank of Ireland and AIB suddenly appear a little safer

With NAMA taking shape and both Bank of Ireland and AIB looking to phase out government guarantees through bond issuance, some are suggesting the institutions are looking a lot less shaky. And could it be (whisper it) that jobs are looking safer?

AIB has closed a €1bn 3-year senior unsecured bond issue and BoI raised the same amount through a 3.5 year bond. What's more the NAMA transfer 'haircuts' announced in September have been heralded by NCB stockbrokers a 'major step along the road to recovery' and it moved its recommendation to 'buy'.

Both banks' share prices have been enjoying something of a rally, which has prompted CNBC's boisterous stock-picker, Jim Cramer, to say: "I've been doing some work on these and I'll recommend them."

Eamonn Hughes, an analyst at Goodbody Stockbrokers, says: "Growth has been quite decent over the last few weeks and the response to the publication of data around NAMA has been very positive. It's probably getting no worse, but it might be a little premature to say it is going to improve dramatically."

Both banks have yet to announce any redundancy programmes, but have not been replacing staff who leave and a hiring freeze is in place until the end of 2010 as part of an ongoing cost-cutting programme. AIB estimates that headcount is down by 1,725 since December 2007, while BoI said it in a recent trading update that it has been reducing staff numbers over the last six months.

Hughes suggests that it's likely the banks could continue to change shape and possibly get smaller over the years, even if a significant number of people have already left through natural attrition.

Another banking analyst says: "You will see continued downsizing of the cost-base, but politically it's going to be very difficult to make redundancies given that the government is supporting them."

However, he adds that typically a bank loses 5-10% of its staff a year through natural attrition, but given the lack of other opportunities Irish employees are likely to stay put if they have the choice. If that's the case, redundancies may be inevitable.