AIB’s branch closures will see it earn property windfall

Bank declines to say how many of the branches it owns but says ‘some’ are freehold

The AIB bank branch on 37/38 O’ Connell Street in Dublin, which is set to close on December 3rd. Photograph: Dara Mac Dónaill

The AIB bank branch on 37/38 O’ Connell Street in Dublin, which is set to close on December 3rd. Photograph: Dara Mac Dónaill

 

On Tuesday, AIB announced plans to close 15 bank branches in Dublin and Cork by the end of this year. This is on top of about 60 AIB branches that have closed since the since the 2008 financial crash.

AIB said the decision was due to the “unrelenting shift in customer preference for digital banking over the last number of years”, a trend that has been “accelerated” by the pandemic.

Of course, much of the shift towards digital banking has been the result of AIB and the other banks forcing people online by withdrawing or rationalising counter services.

The ultra-low interest rate environment means banks are obsessed with driving down their costs, of which staff and bricks-and-mortar branches are a key element. In 2020, AIB reduced its staff numbers by 427 to 9,193, while its bill for wages and salaries declined to €593 million from €619 million.

Yet this wage bill was still €30 million higher than in 2016, when AIB group employed 10,376 staff at the year end.

While there won’t be compulsory redundancies, closing 15 branches will obviously reduce AIB’s headcount further and trim its wage bill.

The other benefit for AIB is a financial windfall from selling the branches that it directly owns. The bank pointedly declined to say how many of the 15 branches it owns, saying only that some are “freehold and some are leasehold”, when asked the question by The Irish Times.

So it’s not clear if it directly owns the branches in Upper O’Connell Street, Donnybrook, Dalkey, Sutton and Sandyford in Dublin, or North Main Street in Cork, for example. But if it does, you’d have to imagine that there would be keen interest among pension funds, investors and developers to acquire the sites.

One thing is for sure, calls by the Labour Party and the Financial Services Union for the Government to have the decision reversed will fall on deaf ears. He might control 71 per cent of AIB’s shares but Minister for Finance Paschal Donohoe has no intention of putting himself in the middle of that row in spite of the O’Connell Street branch being in his constituency.

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