AIB is to cut 1,500 staff by 2022
AIB plans to shed about 15% of its staff by 2022, as the state-owned bank grapples with rising costs and sluggish loan growth.
“We will see reductions over the coming three years of approximately 1,500 staff,” Chief Financial Officer Donal Galvin said after the bank’s earnings on Friday.
AIB had about 9,500 staff at the end of 2019. Most of the cuts will come from teams working on reducing the bank’s bad loans and “head office” type job, he said.
The reductions will shrink the bank to less than a third of its size before the financial crisis in 2007, when it employed almost 26,000 people.
After the government bailout, AIB sold off businesses around the world and pulled back to become a mainly Irish-focused retail bank. Along with most lenders, it has been hobbled by low-interest rates hitting its profits. AIB shares have fallen almost 60% since its IPO in June 2017.
The shares fell 3.1% to €1.84 at 8:38 am.
While the bank is targeting a cost base of about €1.5 billion by 2022, largely unchanged from 2019, the cuts will help offset an expected rise in costs of 2% to 3% this year. AIB expects the bulk of the reductions to come through natural attrition and voluntary redundancies, Galvin said.
In 2019, earnings before tax and exceptional items fell to €1.09 billion from €1.4 billion a year earlier. It is targeting return on tangible equity, a key measure of profitability, of greater than 8% by 2022.
The lender signalled a possible special dividend, and “will apply for regulatory approval to make an additional capital distribution as soon as possible, ideally this year, as a first step,” it said in a statement.
“The intention to ideally look to begin distributing excess capital this year will be well received,” Davy analysts including Stephen Lyons said in a research note.
