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Irish banks told to cuts costs by up to 10 percent

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(Globalpost/GlobalPost)

DUBLIN (Reuters) - Ireland wants its main banks to cut their wage bills by as much as 10 percent after a new report on Tuesday showed that pay rates at Irish banks increased between 2008 and 2012, as the country waded through the depths of its economic crisis.

The government said its state-supported banks AIB <ALBK.I>, Bank of Ireland (BOI) <BKIR.I> and Permanent TSB <IPM.I> must cut salary and pensions costs and also wants them to implement new working arrangements to deliver savings.

Ireland has slowly begun to cut its exposure to the banking sector after a property crash that ravaged the economy forced it to pump 64 billion euros (55.68 billion pounds) - or around 40 percent of annual economic output - into its stricken lenders.

Since 2008, total remuneration at the three banks fell by 6 to 11 percent but rose by 1 percent at the now liquidated Irish Bank Resolution Corporation (IBRC) - formerly Anglo Irish Bank which was at the centre of Ireland's downward spiral that led to a 67.5 billion euros EU-IMF bailout.

The report by Mercer Consultants shows, however, that salary levels at Irish banks are behind European averages for most grades.

The saving at the banks are to be achieved through reductions in payroll and pension benefits, new working arrangements and greater efficiency, according to Ireland's department of finance.

The report found that in the four-year period, the average salaries for bank workers increased but pay for bank bosses still lags behind that of their counterparts in large companies.

In response to the report's finding AIB reiterated its support for the government's policy to reduce its cost base, adding that a programme of staff cuts is expected to achieve over 200 million in savings when completed by 2014.

While a spokesman for Permanent TSB said: "We accept the challenge laid down by the shareholder to reduce total remuneration costs...we will set up a process to achieve this target in as fair and equitable a manner as possible."

(Reporting by Stephen Mangan; editing by Ron Askew)

http://www.globalpost.com/dispatch/news/thomson-reuters/130313/irish-banks-told-cuts-costs-10-percent