NIB to close all branches and lay off quarter of staff

NATIONAL IRISH Bank (NIB) plans to close all its branches and lay off almost a quarter of its staff in an effort to return its retail business to profitability.

NIB, owned by Danish group Danske Bank, said yesterday it intends to close its 27 branches across the Republic and will be seeking 100 redundancies from its 442-strong workforce.

The Irish Bank Officials’ Association (IBOA), the union that represents NIB staff, said it was appalled at the decision and warned it could be a prelude to Danske “abandoning the Republic of Ireland completely”.

Jesper Nielsen, NIB’s head of business development, personal banking, said that “as far as possible” the redundancies would be voluntary and that the bank met the IBOA to outline its proposals. “We will be entering into negotiations with them in the coming days. Their first response was that they were not happy, but they are going to enter dialogue with us.” The bank had agreed terms with the union on similar issues in recent years, including large-scale branch closures, he added.

Terry Browne, country head, Republic of Ireland, said NIB’s retail business was not profitable. The branch closures and lay-offs are designed to tackle this.

He did not say how much the retail business has been losing. The Danske group does not publish figures for its Irish personal banking operations.

Mr Nielsen said the move was also partly a response to the fact customers are increasingly doing business online and through NIB’s smart phone apps. Up to 70 per cent of its retail business is now done online and the number of customers coming into its branches is decreasing.

The bank plans to close its branches by November. From September it will manage its retail business from a personal banking centre in Dublin and seven outlets in locations including Athlone, Cork, Limerick and Waterford, where customers can meet staff.

IBOA general secretary Larry Broderick described the announcement as “the blackest day in NIB’s history” and said the union would be seeking a meeting with Danske chief executive Eivind Kolding in Copenhagen, and with the Danish financial regulator. He would be writing to Taoiseach Enda Kenny and Minister for Finance Michael Noonan as the announcement highlighted the need for an employment strategy for the financial services sector.

Mr Broderick said the bank was effectively making staff pay for previous management decisions that seriously compromised its financial position. NIB lost €184 million in the first three months of this year, 12.5 per cent more than the €161 million it lost during the same period in 2011. NIB chief executive Andrew Healy left last month. Danske plans to spin off €4.7 billion worth of commercial and investment property loans – more than half NIB’s loan book – into a separate unit that will be wound down.

Mr Browne described the loans as “challenged assets”, meaning there is a high risk the borrowers will not repay the money.

The bank’s €3.1 billion commercial property loans make up the bulk of the wind-down unit. It also includes residential properties private investors bought to let.

NIB’s parent plans to merge it bank with its other Irish business, Northern Bank, and rebrand the new entity as Danske.