AIB is DEFINITELY cutting 2,000 staff and chopping compensation costs
This is hardly something to gloat about, but our prediction that AIB was to make 2,000 redundancies has proven prophetic.
The bank confirmed in its preliminary results for 2010 that "a reduction of 2,000 staff will take place on a phased basis over 2011 and 2012" on the back of a record loss of €10.4bn last year. The redundancies are expected to be voluntary and, according to initial statements from chairman David Hodgkinson, will be spread across the organisation.
The bank employs around 14,600 people, so the cuts represent 14% of total headcount.
The overall redundancy figure may seem fairly brutal - IBOA president Larry Broderick has described it as the equivalent of a major multinational company pulling out of Ireland - but they're not huge considering the losses and the cuts already implemented.
Over the last two years, more than 1,300 staff have left AIB (excluding the sale of its Polish unit) - 400 last year and 900 in 2009 - and considering its need to rapidly slim down, the cuts could have been deeper.
It's also worth noting that the 2,000 figure doesn't include any potential fall out from AIB's merger with EBS, which sources suggest could number "several hundred" more redundancies.
While undoubtedly some redundancies will hit its capital markets functions, the majority are likely to occur in its group functions (as it sells off non-core assets) and AIB RoI, which employs over 7,000 staff.
Pay and staff numbers falling in capital markets
Perhaps the real question is whether it can keep hold of staff in its capital market division.
It wasn't a great year for AIB capital markets; it posted a profit of €71m, or a 57% reduction on the €468m in 2009. This was largely down to a €268m loss in corporate banking, but even global treasury's €344m profit was a 19% slide on 2009.
Although it admits that staff numbers in capital markets have declined, AIB has yet to break out employees by division. While there are rumours that turnover in its capital markets division has been high, this is unlikely to account for the 42% slide in personnel expenses.
Instead, it suggests that the clampdown on bonus payments has hit home and the internationally mobile capital markets staff are unlikely to stick around in the face of such drastically reduced compensation.
