Services in Ireland’s banks will suffer as a result of cost cuts taking place
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Banking generally is meant to be a dull business, but right now it is making waves for all the wrong reasons. London-based Barclays is in the news for rigging the markets,
Ulster Bank is making daily headlines for gross incompetence and Allied Irish Banks (AIB) is back in the news as it prepares to drastically reduce services while increasing borrowing costs.
AIB has of course been both dishonest and incompetent in the past, but yesterday’s announcement was only a statement of the inevitable and customers and staff must now pay the price of bad decisions made years ago.
Worst hit will be those living in the countryside and those who cannot use the internet thanks to bad broadband or their reluctance to master technology.
Some will undoubtedly be tempted to move to other banks, but this will probably do those little good in the long run. The truth is that banking is changing and we had all better get used to it.
The lesson from a hundred different industries is that once information has been stored on computers, the public will be forced to skip middlemen such as travel agents or bank tellers and do the work themselves.
National Irish Bank said a few weeks ago that it was closing all 27 branches in the Republic and replacing them with nine service centres that will require an appointment for those wanting to talk about mortgages, business lending or pensions.
The TSB Irish Permanent are currently in the middle of cost cutting actions replacing counter service staff with automated service machines for the last six months in their branches.
Like AIB, National Irish hopes customers will use post offices. What a busy place the humble post office is becoming as the banks fall on their swords. Let’s hope they can do something about all those queues. Selling stamps from machines that actually work might be a good start.
AIB is unlikely to go anywhere close to NIB’s abolition of the branch network, but it has taken baby steps in this direction. How many steps remains to be seen, because yesterday’s announcement told us nothing about the number of closures.
In some industries the switch to the internet has meant great savings. Cheap flights and films are two examples. AIB customers won’t enjoy the same benefits, because the bank is still desperately trying to return to profitability and become a real bank again rather than a ward of the State.
Chief executive David Duffy was quite explicit about this yesterday, telling staff that the bank will raise the cost for borrowers. This is bad news for people who want a loan, but good news for savers and the taxpayer. It was always absurd that State-owned operations such as AIB and Permanent TSB charge different fees for the same simple service: borrowing money for next to nothing from Frankfurt and re- lending it to Irish residents.
Still, AIB’s latest announcement confirms what we already know in many other parts of our lives: most of us will have to make do with worse services in the years ahead which cost more.
Aviva Insurance Galway seeks 220 new employees after major redundancies in Ireland
Aviva in Ireland is to recruit 220 new positions in Galway after announcing hundreds of Irish redundancies last year.
The jobs are advertised in local Galway media, on recruitment sites and the Aviva website and the new staff will be based at the Galway West Business Park in Knocknacarra.
Aviva Ireland spokesperson Gráinne Mackin said: “We are delighted to commence the recruitment process for these 220 new positions in Galway.”
“Our new Centre of Excellence in Galway will place our expanded Knocknacarra team at the centre of our UK and Ireland operations. This is a significant step forward in achieving our longer term vision for the business in Ireland. We look forward to welcoming our 220 new members to our team in the month’s ahead.” she said.
The insurance company has said it plans to exit 16 non-core business areas internationally and announced senior management changes following a major strategic review of the group.
“16 segments that are currently producing or will prospectively produce returns below the group’s required return & will be exited.” These included its South Korea operation and small Italian partnerships. We are putting in place a management structure to achieve the required improvements in performance,” it said in a statement.
The company is currently seeking a new CEO to replace Andrew Moss who left his position in May.
AIB Irish branches to close after new deal set-up with An Post
Allied Irish Banks has said it plans to close branches following a new deal with An Post to extend banking services throughout the State’s 1,100 post offices as the lender unveiled an update to its plans to restructure the business.
The bank told staff in a 24-page “strategy update” document customers will be able to lodge cheques and deposits at An Post outlets over the coming months in addition to banking services already on offer to AIB customers through the post office network.
“Our distribution network will be enhanced by the new An Post initiative and it will support us in making changes to our current branch network,” the AIB document says. “Regrettably, this means that the number of branches will reduce as part of the move to lower costs. But, through the use of mobile banks and new branch openings in selected areas, AIB will bring banking services to new locations.”
The strategy to close some of the bank’s 270 branches forms part of the plan to reduce costs by offering more services through new technology and to return the bank to profitability by 2014 to attract new investors to reduce the State’s 99.8 per cent shareholding.
“We need to take steps which will ensure AIB is not dependent on State support – and instead is a bank that is largely deposit funded,” chief executive David Duffy said in the document.
“It is important that we can make this transition and attract new investors, allowing us to return funds to our shareholders and the taxpayer.”
AIB is reducing its workforce by at least 2,500, or almost one in every five jobs, and is cutting pay by up to 15 per cent to reduce costs after receiving a bailout of almost €21 billion from the Government.
The bank said it also plans to “adjust lending rates relative to the cost of funds”, according to the document.
“It is not sustainable to produce products and services which cost us more than we earn,” AIB says in the document.
The bank announced a restructuring to a “One Bank” model°, making the bank more focused on customers. This moves AIB away from the “siloed” structure of the boom years which created internal independent fiefdoms, looser lending standards and an overexposure to the property sector.
The bank is being split into four internal divisions to be up and running by September.
AIB is being restructured around customers and the distribution on one hand and products on the other. The former personal and business banking and corporate, institutional and commercial banking divisions will merge into these two new structures.
The bank’s UK business will be run as a separate division, while a new financial solutions group is being set up to concentrate on the problem loan cases, including mortgage arrears, and on the non-core parts of the banks that must be offloaded or wound down.
Former EBS chief executive Fergus Murphy is becoming head of products, Bernard Byrne is head of customers and distribution, Ronan O’Neill is head of AIB in the UK and Peter Spratt is head of financial solutions group.
The other senior members of the new management team include chief operating officer Anne Boden, head of internal audit Dominic Clarke, and chief risk officer Peter Rossiter.
Head of strategy Enda Johnson is taking over the role of head of corporate affairs and strategy, taking responsibility for corporate affairs from Alan Kelly, who is leaving the bank.
Ireland’s Doctors given warning over
Unfit to work sick certs
Irish doctors have now been warned by their supervisory body not to issue sick certs to patients unless they are genuinely unfit for work.
The Medical Council has warned doctors that “normally” they should sign a sick cert only after reviewing a patient’s condition. GPs have also been enjoined to make the certificates they write legible.
The council took the unusual step yesterday of reminding doctors of the rules on ethics and professional conduct that apply to the issuing of sick certs.
It said it was responding to the “ongoing debate” about sick leave and its impact on the economy and the public finances. Absenteeism costs the economy about €1.5 billion a year, according to the Irish Business and Employers Confederation, with the average worker missing six days on top of holidays.
Minister for Social Protection Joan Burton is examining proposals to remove the certification of sick leave from family GPs and give it to independent medical assessors with expertise in occupational medicine.
Last month, a Sunday Times journalist was able to obtain a sick cert from seven out of 10 GPs she visited, in spite of telling them she wasn’t ill and simply wanted a day off to attend a wedding.
The council’s rules state that doctors must be accurate when issuing certificates, reports and prescriptions and should make sure the document is legible.
It said all complaints on the issue would be thoroughly investigated and action taken if a doctor was found to be in breach of the rules.
Ten complaints about certification have been received over the past four years, it said. These include complaints by employers about the length of sick leave given to employees and complaints by employees about a doctor’s refusal to sign a sick cert.
Doctors are required to renew their registration with the council each year and as part of this process they sign a declaration that they have read the council’s guidance, which includes the rules applying to the issuing of certs.
“Implicit in this interaction is the understanding that they must be truthful in what they certify,” said council president Prof Kieran Murphy. “Where a complaint is made and a doctor is found to be in breach of the guidance, we will take it very seriously.”
Serious complaints could result in a fitness-to-practise hearing with possible suspension of a doctor’s registration.
US companies in Ireland have 2,500 vacancies
Joanne Richardson, chief executive of the American Chamber of Commerce in Ireland, with US ambassador to Ireland Dan Rooney, and Peter O’Neill, president of the chamber, at its Independence Day lunch yesterday.
US COMPANIES in Ireland have more than 2,500 job vacancies, a new survey has found.
The American Chamber of Commerce in Ireland’s annual workforce activation survey, which tracks employment trends in US firms here, shows that, of 195 US companies that responded to the survey, 75 per cent are hiring.
With vacancies in areas such as ICT, pharmaceuticals and medical technology, just 55 per cent of firms said they could fill all their vacancies in Ireland.
Speaking at the chamber’s annual Independence Day lunch yesterday, attended by US ambassador to Ireland Dan Rooney, the president of the chamber and IBM Ireland general manager Peter O’Neill called on Minister for Education and Skills Ruairí Quinn to make science a compulsory subject, at least until Junior Cert level.
Mr O’Neill described a proposal to ring-fence over half of all teaching hours for English, Irish and maths as “a concern”.
“A reduction in student access to science at junior cycle is likely to reduce the number in a position to consider taking science at senior cycle with a consequent impact for uptake at third level,” he said.
Mr O’Neill said that while there had been 40 investment announcements by US companies in Ireland so far this year – an investment in the Irish economy worth about $2 billion (€1.6 billion) – he said “Ireland cannot afford to be complacent” on the quality of its workforce.
Also speaking at the lunch, which was attended by 400 representatives of the US multinational community in Ireland, Mr Rooney echoed Mr O’Neill’s words, saying: “Education is the key to investment. Ireland must commit to educating its workforce.”
Looking back on his three-year tenure as ambassador, Mr Rooney said Ireland had “turned a corner”, and he was “fully confident that Ireland is on the right track”.
“As ambassador, I want to tell you how pleased I am that American companies haven’t abandoned Ireland during the past couple of years,” he said.
In the past year alone, US firms were behind almost 40 per cent of all offices bought or leased in Ireland, Mr Rooney added.
Permanent TSB to cut mortgage by 0.35% and deposit rates
Permanent TSB is to cut its standard variable rate mortgage by 0.35%. This will reduce the variable rate for home owners to 4.34%.
The bank says it will reduce payments on a 25 year mortgage with a current balance of €200,000 by €40 per month.
The bank also announced that it is to reduce deposit rates in the coming days.
Chief Executive Jeremy Masding said the standard variable rate reduction will benefit 80,000 customers and is part of the process of bringing mortgage rates more into line with competitors.
The bank has to be both financially strong, and strongly competitive for customers, he said.
Mortgage rates had to be economically viable to allow the bank to return to profitability he said.
Some customers now double charged by Ulster Bank in Ireland
Ulster Bank has confirmed that some customers have been double charged for transactions as the bank continues to work through the backlog of unprocessed payments.
The bank has apologised and says it will correct the problem although it doesn’t yet know how many accounts have been affected.
The errors have come to light as the bank reconciles unprocessed transactions with accounts.
Some payments like direct debits and loan payments have been taken out twice and some salaries have been added twice.
In a statement to RTÉ News, the bank confirmed some customers may have noticed duplicate transactions.
The bank says it apologises and is fixing the problem and no customer will be out of pocket.
Earlier, Ulster Bank said most account balances have now been updated to include transactions made up to last Monday.
There is still a backlog but the bank says progress is being made.
Meanwhile, Financial Services Ombudsman Bill Prasifka has said that he had only received a handful of complaints in relation to problems being experienced by Ulster Bank customers.
However, Mr Prasifka said his office has received a large number of queries.
Speaking on RTÉ’s Morning Ireland, Mr Prasifka said that this was not surprising as the problem is ongoing, adding that customers experiencing problems are always encouraged to contact their bank in the first instance.
Mr Prasifka said that any complaints his office may receive will be dealt with on a case by case basis.
“The important thing for people to know is that our statutory scheme is one based on compensation, we don’t run a penalty scheme, we’re not there to impose penalties on an institution, we’re not a regulator,” he said.
“Compensation, roughly speaking, would be two elements; one again is the out of pocket loss, someone whose salary was not deposited, their account is in arrears, there may be interest or other charges, that obviously has to be rectified.
“We also have a very established practice of giving compensation for, if you will, stress or inconvenience arising out of maladministration.”
In a statement yesterday, Ulster Bank CEO Jim Brown apologised to customers and said he would not take a bonus payment this year because of the ongoing technical problems.
He said that he was personally committed to re-earning the trust of customers and that he had informed the Ulster Bank board that he does not wish to be considered for an annual bonus for 2012.
The issues have been ongoing since late June and the bank says normal service will resume for most customers by 16 July.
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