1,700 have departed from Bank of Ireland in the last 12 months

Bank of Ireland's interim report pours cold water on the recent tentative optimism around the financial services industry. It doesn't make for pretty reading - the firm has posted a loss of nearly €1bn for the six months to the end of September, and its iron grip on costs has seen headcount shrink by 1,700 over the last year.

The loss can be attributed to the €1.8bn writedowns on bad loans, which dragged an operating profit of €787m to a pre-tax loss of €979m. BoI also expects to transfer €16bn of its remaining risky loans into Nama, but warned that this could require it to seek new sources of funding.

"While the group's strong preference would be to raise capital from private sources, in such a scenario, ultimately it may be required to seek capital from the Irish government, which would further extend the ownership and influence of the Irish government on the group," it said.

Not surprisingly, it's been focusing on cutting costs where it can, and this is reflected in the bank's permanent headcount. It now employs 14,779 full-time staff, compared to 16,437 in September 2008, and total headcount is down by 10% on last year when contract staff are also taken into account.

At lot of these departures can be put down to its ongoing recruitment freeze and policy of not replacing exiting staff. However, it's also made redundancies within certain business areas including its UK mortgage subsidiary, some within corporate and business banking as well as downsizing its asset management function.

Staff costs are down by 11% in all, through a combination of smaller headcount and slashing this year's bonus pot.

Bank of Ireland's domestic retail banking division has suffered particularly badly this year, due to the souring economic climate, higher impairment charges and subdued demand for credit. It posted an operating loss of €655m, or a startling 329% decrease on the same period in 2008.