Counting the employee cost of the 'third force' in Irish banking

A three-way merger of EBS, Irish Nationwide and Permanent TSB could lead to the closure of some 120 branches across Ireland, or nearly half their combined total.

The forecast in a note by Davy Stockbrokers has suggested the merged mutuals' group - which it is predicted could become a 'third force' in Irish banking - could look to make savings of at least €44m a year and have a net asset base of some €1.9bn, with the aggregate total of 248 branches being cut to around 128.

The possibility of the merger, which has long been on the table, moved a step closer in January when PricewaterhouseCoopers completed a draft due diligence report on EBS and Irish Nationwide.

What this all means for jobs, however, is as yet unclear. There's unlikely to be much in the way of significant detail until the deal is completed, probably in the second quarter of this year, suggest some analysts, while some €8bn of Irish Nationwide's €10bn loan book going into NAMA.

However, as it is estimated there are an average of 11 staff per branch, this could mean some 1,300 jobs could potentially be lost, though this figures is likely to be mitigated by transfers and relocations.

According to Davy Stockbrokers analyst Emer Lang, it will probably end up as a classic in-market merger.

"There is quite a scope for taking out a lot of cost, but it is probably not going to happen straight away and it is hard to say in what sort of quantity jobs might be likely to be lost," she points out.

"It comes down to the fact that all the institutions are over-staffed, by their own admission. We just do not need the resources we needed for the Celtic Tiger and so what is going to need to be worked out is how that new model might work.

"But we also need to factor in the expectation that the economy may yet turn in the not too distant future," she adds.