EMPLOYEES at National Irish Bank (NIB) have agreed to accept cost-cutting plans in which the bank will reduce its workforce by about a quarter.
A circular from the Irish Bank Officials Association (IBOA) said its members at the bank, owned by Danish lender Danske, have voted to accept revised voluntary redundancy terms.
NIB is cutting 150 jobs from its staff of just over 600 in the next 18 months and shutting 25 of its 58 branches. Two-thirds of job cuts will be at the branches, with the rest coming from other parts of the bank, including its Dublin head office.
The cuts came after NIB suffered increased losses after rapid expansion in the years since its takeover by Danske. NIB posted a full-year loss of €661m for 2009, up from €552m the previous year, after setting aside €704m to cover losses on property loans. The bank said most of the impairment charge was to cushion losses on its €3.3bn commercial property loan portfolio, which accounts for about a third of its overall loans.
The bank had offered staff six weeks' salary for every year of service, capped at two years' pay. That offer was rejected by the IBOA and, after the intervention of the Labour Relations Commission, NIB agreed to increase its offer to seven-and-a-quarter weeks' pay for each year of service up to a maximum of two-and-a-half years' salary.
According to the IBOA, Danske is committed to its Irish operations. It cited a letter from Thomas Brogen, a member of the bank's executive board, saying it will continue to invest in National Irish Bank.
Danske chief executive Peter Straarup said on a conference call with analysts earlier this month that impairment charges will be lower at NIB this year.
"Still for 2010, we think Ireland is going to cost us a bit; hopefully not as much as last year," he said.
Danske is not the only foreign lender to cut its Irish operations dramatically. ACC Bank's owner, the Dutch co-operative Rabobank, axed 200 jobs and 16 branches last year. And Ulster Bank, part of the Royal Bank of Scotland group, has cut about 1,000 jobs in the last couple of year, mainly by shutting down First Active.
The Sunday Tribune broke the story that the bank was planning to close branches and lay off staff. The bank denied it at first but confirmed it the following day.