Bank of Ireland to axe hundreds of managers in shake-up

Francesca McDonagh takes first move to tackle costs since taking over in October

Francesca McDonagh, who pledged in her first briefing with analysts a month ago to reduce costs at Bank of Ireland this year and “improving our efficiency”. Photograph: Dara Mac Dónaill

Francesca McDonagh, who pledged in her first briefing with analysts a month ago to reduce costs at Bank of Ireland this year and “improving our efficiency”. Photograph: Dara Mac Dónaill

 

Bank of Ireland’s chief executive, Francesca McDonagh, is working on plans to cut 15 per cent of the group’s managers and executives, in her first major move to tackle costs since joining the group less than six months ago.

The move could lead to the elimination of up to 200 jobs across Ireland and the UK, from middle-manager grades right up to just under the bank’s top executive committee, according to sources.

“We don’t comment in relation to staffing matters. However the bank’s voluntary parting scheme is available to employees and has been for some time,” a spokesman for the bank said.

“We have previously stated that one of our key strategic priorities is transforming the bank, which involves simplifying and streamlining the organisation for the long-term sustainability and competiveness of our business.”

Ms McDonagh (43) pledged in her first briefing with analysts a month ago, as the bank unveiled full-year results, to reduce costs at the group this year and “improving our efficiency”. Bank of Ireland’s aim is to cut its cost base to less than 50 per cent of its income over time.

Major overhaul

The bank’s staff count has fallen by almost 30 per cent since 2008 to about 11,200, including employees who left under a voluntary redundancy plan initiated in 2012.

The bank’s cost-income ratio increased to 62 per cent last year from 57 per cent in 2016, as it factored in some of the costs from a major overhaul of its information technology (IT) systems, which it started in late 2016.

Having succeeded Richie Boucher last October, Ms McDonagh, a former HSBC executive, told analysts last month that the group “can’t simply wait” for the IT programme to deliver cost savings.

The Irish Times reported last October that Bank of Ireland executives had already been working on plans before Ms McDonagh’s arrival to cut more than 1,000 jobs, starting next year, as a result of its €900 million IT improvement plan.

Analysts expect Ms McDonagh to outline more detail on the cost savings envisaged from that project when she hosts her first major analysts and investors day – or what is known as a capital markets day – in June.