750 jobs to go in First Active merger with Ulster Bank
The Ulster Bank Group has announced 750 redundancies in Ireland and the ending of the former building society First Active brand by the end of the year.
The Ulster Bank Group has announced 750 voluntary redundancies in Ireland and the ending of the former building society First Active brand by the end of the year.
Some 550 of the redundancies will come from the Republic with the remainder from Northern Ireland.
Group chief executive Cormac McCarthy told RTE radio this afternoon that the there were a number of options on the table but said selling First Active was not one of them.
“We feel given that given the change in the nature of the market place and lesser activity that a business like First Active which has served us so well over time is too narrowly focused to move ahead and it makes more sense to merge it with Ulster bank . . .”
Under the plan three-quarters of First Active’s 60 branches will be merged with sister lender Ulster Bank and the remainder will rebranded. First Active employs 400 people.
First Active customers do not need to take any action as their accounts will automatically transfer to Ulster Bank over the coming year.
A voluntary severance package will be made available to staff throughout the group and meetings will be held between employees and unions to discuss the merger and redundancy terms.
IBOA general secretary Larry Broderick blamed the “incompetence” of senior management for the loss of the 750 jobs.
IBOA, which represents 4,000 workers at the bank, and trade union Siptu, which represents 360 staff at First Active plan to challenging the scale of the redundancies.
“So the first item on the agenda for our negotiations with management will be to establish whether this number of job losses is justified,” he said.
Last week ratings agency Moody’s downgraded its ratings of Ulster Bank and First Active, citing Ulster’s relatively large exposure to the property and construction sector in Ireland.
The Ulster Bank Group employs 7,000 people on an all-Ireland basis and the job losses would see its Irish workforce fall by around 10 per cent.
Once the merger is complete Ulster Bank will have 1.8 million with 295 branches. First Active and Ulster Bank have been run separately since RBS bought First Active five years ago for €887 million.
“Going back to when that deal was done, we were surprised that RBS kept the smaller First Active brand given the costs associated with running two operations in what is a very small market,” Scott Rankin, an analyst at Davy Stockbrokers, wrote in a research note today.
The company said the decision was taken "at a local level" by the Ulster Bank Group and were not as a result of a strategic review of operations by its parent, Royal Bank of Scotland, which last week announced a record loss in UK corporate history.
RBS is working on a restructuring programme that is expected to reduce its worldwide workforce by 10,000 jobs.
Last week shares in RBS collapsed in the wake of the British government’s latest rescue bid and news the bank is facing the worst loss history.
RBS estimated bad debts and write-downs on the value of past acquisitions could leave it as much as £28 billion (€20.9 billion) in the red for 2008.
A helpline is available for First Active or Ulster Bank customers with any questions: 1800 303 068.