Senior posts to go first in 'radical' AIB changes

JOB LOSSES at AIB will take place on a phased basis but will be more immediate at senior levels in the most “radical” changes in the bank’s history, according to its executive chairman David Hodgkinson.

In an e-mail to staff, Mr Hodgkinson did not disclose the number of jobs to be cut under its restructuring plan but said he would meet management teams to update them on plans. “Our preferred approach is that most redundancies will be achieved on a voluntary basis,” he said.

The bank completed the evaluation of senior management, he said, and planned to select a new executive team as soon as possible.

“At the most senior levels in the organisation the impact will be more immediate,” he said.

“We have completed the evaluation process and are now selecting the top team which will lead AIB.”

The bank has been carrying out Hogan and Watson Glaser aptitude testing on senior management to assess their suitability.

Mr Hodgkinson said the bank was in the final stages of a strategic review and that a report had been submitted to the board which sets out a plan to rebuild AIB.

The bank will discuss the report with the Government and relevant State authorities, he said. “For it to succeed, it will require radical change of a magnitude never before undertaken by AIB,” he added. The review would address staff reduction and redeployment.

AIB, which was formed in 1966, is setting up a non-core unit to manage business falling outside the future risk profile of the bank.

Transforming AIB into a smaller bank would require significant resources until the work is completed, said Mr Hodgkinson.

“So, while there will be job losses, most will be brought about on a phased basis throughout the organisation as the transformation process winds down and we reach our target size,” he said.

The Government has taken a 92.8 per cent stake in AIB after pumping €3.7 billion into the bank last December on top of the €3.5 billion recapitalisation in 2009. The bank will require at least a further €4.7 billion under the EU-IMF bailout following the next round of Central Bank stress tests at the end of this month. AIB will also have to reduce in size under the terms of the €85 billion financial bailout.

Mr Hodgkinson told staff the changes at AIB would require a plan of action “for transforming our behaviours and embedding new values where necessary”.

“I know that you have all now been through a period of uncertainty and are very anxious for clarity on where you and this organisation stand with regard to the future,” said Mr Hodgkinson.

The Irish Bank Officials’ Association has sought an urgent meeting with Minister for Finance Michael Noonan and Mr Hodgkinson to discuss AIB’s plans.

The union said it had been given no indication from its engagement with the bank that the restructuring plan was at such an advanced stage.