AIB's Polish offshoot to shed 2,150 staff

More than 2,150 employees at AIB's banking operations in Poland will lose their jobs by the end of 2003. This represents about 20 per cent of its workforce.

The restructuring is part of a continuing investment programme at Bank Zachodni WBK (BZ WBK), Poland's fifth-largest bank following the merger of Bank Zachodni and WBK in 2001.

The job losses follow the introduction of new computer systems.

The bank said yesterday it hoped the actual number of people laid off would not exceed 1,600.

The investment programme includes the introduction of a centralised branch banking platform to streamline transaction processing. This should bring its processing standards up to Western European standards. BZ WBK employs close to 11,000 staff in Poland. Deteriorating economic conditions in Poland combined with consolidation in that market have triggered job losses throughout the sector.

AIB has signalled that profits from its banking operations in Poland will be weaker than expected. Profit forecasts prepared for the merger of the Polish banks, which was completed on target in June 2001, show that AIB estimated net profits at the merged operation of 318.3 million Polish zlotys (€88.5 million) for 2001, 550.3 million zlotys for 2002 and 709.2 million zlotys for 2003.

The bank has also made substantial provisions for bad debts The profit forecasts, prepared for the merger, were based on projected growth in gross domestic product of 5 per cent each year over the three-year period.

They included expected net cost savings of 38.6 million zlotys in 2001, 116.5 million zlotys in 2002 and 153.3 million zlotys in 2003. Poland's central bank cut interest rates again yesterday after fresh data confirmed that economic growth fell to the lowest level in a decade last year.

Data for 2001 showed that gross domestic product grew by just 1.1 per cent, down from 4 per cent in 2000. Domestic demand fell by 2 per cent, with the overall figure only being kept in positive territory by strong exports.

Unemployment has hit a record high of 17.4 per cent, or 3.1 million, while inflation has dropped to a post-communism low of just 3.6 per cent.