Bank of Ireland weighs Burlington Plaza exit to cut central offices

Staff would be relocated to group’s two largest locations, its headquarters on Mespil Road and a premises on Baggot Street

 Burlington Plaza at Burlington Road, Dublin. Photograph : Matt Kavanagh

Burlington Plaza at Burlington Road, Dublin. Photograph : Matt Kavanagh

 

Bank of Ireland is considering exiting one of its three central Dublin hub offices to reduce its footprint in the capital and cut costs amid declining employee numbers and chief executive Francesca McDonagh’s flexible working initiative, according to sources.

They said the lender was looking at exiting the lease on the Burlington Plaza 2 premises, base for about 700 people, including employees in its markets and treasury and corporate banking units, by the end of this year to take advantage of a break clause in its contract.

Such a move would lead to staff relocating to the group’s neighbouring two largest locations, its headquarters on Mespil Road and a premises on Baggot Street called Baggot Plaza.

Currently the three locations act as bases for as many as 4,000 employees. However, day-to-day staff levels in the offices are lower after the group rolled out a so-called agile workspaces scheme in the past two years that currently allows 3,500 employees – about a third of its workforce – to work from alternative offices or home.

“While no decision has yet been made in relation to Burlington Plaza, we continue to keep our property footprint under review,” a spokesman for the bank said. “We’ve decreased our office space by 27 per cent in two years while increasing the level of flexible working, with a third of our colleagues now working flexibly.”

Last year saw Bank of Ireland exit its leased New Century House offices in Dublin’s International Financial Services Centre (IFSC) as well rented space in Hume House in Ballsbridge, while the group also reconfigured its Mespil Road headquarters to an open plan format to provide for a more efficient use of space.

The bank has also culled 20 per cent of its managerial positions in recent years and boosted frontline roles. Its average number of employees fell by less than 2 per cent to 10,424 in 2019, according to its latest annual report, published last week.

Interest rates

Banks internationally are focusing increasingly on cost savings as their earnings are being squeezed by ultra-low central bank and market interest rates as well as muted loan book growth.

The US Federal Reserve moved on Tuesday to lead what is expected to be another round of rate cuts among major central banks to cushion the economic blow from coronavirus.

Bank of Ireland reported last week that its underlying pre-tax profit fell 19 per cent last year to €758 million, and Ms McDonagh dropped a key profitability target unveiled in 2018 of delivering a 10 per cent return on shareholders’ equity in the business by 2021. It is now aiming for an 8 per cent rate by next year, up from 6.8 per cent in 2019.

Ms McDonagh said she continued to expect to hit the higher rate over the longer term, and vowed to find €50 million of further savings in a “challenging” business environment to reduce its costs base to €1.65 billion. That is in addition to €200 million of cuts previously earmarked for the four years to 2021.