Allied Irish to cut 2,000 jobs after euro10 bln loss

AP News
Posted: Apr 12, 2011 5:27 AM
Allied Irish to cut 2,000 jobs after euro10 bln loss

Allied Irish Banks announced Tuesday it will cut more than 2,000 jobs after reporting a 2010 net loss of euro10.36 billion ($15 billion), by far the worst in its history.

The Dublin-based bank said the losses it has suffered at the hands of Ireland's bust property market mean the current payroll _ 12,000 in the Republic of Ireland, 2,500 more in the United Kingdom _ must be slashed by next year. Union chiefs warned that the bank could shed up to 6,000 staff in Ireland alone.

Tuesday's figures dwarf the previous loss record of euro2.3 billion set in 2009, when the Irish government began pumping billions into its banks to prevent them from falling like dominoes. The crisis spurred a flight of funds from Dublin in 2010 _ Allied Irish said its deposit base fell 30 percent during the year to euro52 billion ($75 billion).

The 2010 losses amounted to a staggering euro5.64 per share. The government owns 93 percent of the shares, which fell 4 percent Tuesday to euro0.24.

Ireland's taxpayers already have pumped more than euro7 billion into Allied Irish. They're also on the hook to inject at least euro13 billion more following government-ordered stress test results, which projected worst-case losses in the event of continued recession, rising unemployment and a surge in mortgage defaults.

Ireland itself has been forced to take an international bailout after being overwhelmed by the cost of preventing the collapse of the country's six domestically owned banks. All today have either been or are about to be nationalized soon.

The new government of Prime Minister Enda Kenny has earmarked Allied Irish and Bank of Ireland to be the only survivors of Dublin's banking bloodbath. The other four are being dismantled and their parts either sold off to foreign banks or merged into the big two.

The Allied Irish chairman, David Hodgkinson, said he must slash staff because the business _ which swelled during Ireland's 1994-2007 property boom _ has much less business to manage today.

He said his first priority was to negotiate with the government about the scale, timing and conditions of the jobs cull. It is expected to be expensive, because European and Irish labor law typically means five-figure compensation payments to laid-off workers, depending on seniority.

Hodgkinson, who previously was chief operating officer at London-based HSBC, said the layoff payments "should be reasonably generous, because people are losing their livelihoods and their jobs."

Larry Broderick, chief of the union that represents bank workers in Ireland, warned that the bank was seeking many more than 2,000 job cuts. He said up to half of the Irish payroll could end up being forced out.

He called the plan for 2,000-plus job losses "a shocking figure, equivalent to a major multinational pulling out of Ireland."

Ireland, a nation of 4.5 million, currently has an unemployment rate of 14.7 percent, a 17-year high. Economists say the figure would be much higher were it not for surging emigration.