Monday, March 21, 2005
It emerged last night that the Bank of Ireland, Ireland’s second largest bank, intends to lay off 15% of its workforce. Such a move would affect 2,000 of the bank’s 12,000 employees. The job cuts would be an effort to reduce the banks large cost base and thus improve its overall competitiveness.
Newly appointed CEO Brian Goggin, who took over from Michael Soden at the end of last year, suggested at the time of his appointment that one of his first moves would be to cut costs. This objective is likely to be fulfilled on Tuesday when the company makes a formal announcement about the cuts. The relative contributions of staff versus technology to the Bank’s cost versus revenue base is unclear from the announcement, begging questions as to the rationale for such changes.
The Irish banking sector – one of the world’s most profitable – has experienced a dramatic change in the last few months. Danske bank, one of Denmark’s leading banks recently announced the purchase of National Irish Bank. The Bank of Scotland also recently announced its entry into the Irish retail banking sector by purchasing the ESB chain of retail units for €120m. Both banks have said they intend to introduce significantly cheaper products to the market over the next twelve months.
Both the Bank of Ireland, and its biggest competitor AIB announced profits of over €1bn last year.