B of I to shed 2,100 jobs in bid to save €120m

Bank of Ireland will shed up to 1,700 of the 12,000 jobs in its operations in the Republic over the next four years in a bid to cut some €120 million a year from its cost base. A further 400 jobs are to go at its British and Northern Irish businesses.

The bank also said it would close 10 branches as part of the restructuring.

The State's second-largest bank said it could not rule out compulsory redundancies if it failed to achieve its target of cutting 2,100 jobs, or 12 per cent, of its 17,000-strong workforce by 2009. "Our objective is to attempt to achieve that on a voluntary basis. It may not be possible in which case we would look at involuntary redundancies," Bank of Ireland spokesman Dan Loughrey said.

The Irish Bank Officials' Association (IBOA) warned that any move to force people out of jobs would be resisted.

IBOA general secretary Mr Larry Broderick said the planned cuts were a "dreadful reflection" on the bank's board, which was devoid of any strategic vision "other than a slash and burn approach".

The IBOA, which will meet bank officials today, said it would let them know there could be "absolutely no co-operation with any aspect of these proposals". The IBOA represents about 7,000 of the bank's 12,000 employees in Ireland.

The bank's move, which is designed to drive its cost/ income ratio down to 47 per cent over the next four years from its current level of 54 per cent, should result in a competitive, lower-cost operating model, it said.

While the bank was doing well and was set to report its 14th consecutive year of profit growth this year, the move is a recognition of the growing pressures in its sector, Mr Loughrey said.

In common with its domestic rivals, Bank of Ireland faces increased competition from new arrivals in the market such as new National Irish Bank owner, Danske Bank, and Bank of Scotland (Ireland), which recently acquired a branch network.

The prospect of more consolidation in the European banking sector and continued margin attrition are also factors facing the banks. Mr Loughrey noted that margins in the year to the end of March are expected to fall by 20 basis points, equivalent to the loss of €200 million in profits.

"We want to move from a position of relative strength," he said.

The bank declined to comment on how many jobs would be outsourced or to give details of where the job cuts would be made.

However, it plans to centralise a number of group support services such as procurement, facilities management and human resources which are currently spread throughout the group.

It also plans to consolidate activities such as its credit services operations which are currently very dispersed. Similarly, the bank runs 22 call centres throughout Britain and Ireland, a number it hopes to cut to four.

In its retail operations, Bank of Ireland will be seeking to improve productivity through increased automation and changes to work practices although it has no plans to extend opening hours at present.

Despite the overall plan to cut jobs, the bank remains committed to increasing the number of employees dealing with customers in its branch network by around 500 through transfers from back-office functions.

The plan is expected to achieve €30 million in savings in the next financial year followed by €75 million in 2006/7, €105 million in 2007/8, reaching the €120 million target in 2008/9.

Redundancy and other costs are expected to come to around €210 million with a further €40 million to be invested in technology and automation.