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AIB to cut 2,000 jobs after loss hits $15bn

Dublin, April 13, 2011

Allied Irish Bank (AIB) aimed to put the 'collective madness' of a homegrown property bubble behind it with an annual loss of 10.4 billion euros ($15 billion) and a plan to axe over 2,000 jobs.

A former stock market darling with international ambitions, AIB has been effectively nationalised and saved from collapse by emergency ECB funding after being shut out of debt markets and losing 22 billion euros in deposits last year.

There were further 'slight' deposit outflows this year, mainly from overseas corporate funds, but fresh stress tests which require AIB to raise 13.3 billion euros in capital and a 'big bang' overhaul of the sector have provided some stability.

'The news of the bank's recapitalisation has been viewed positively by the market and we hope that that now represents a turning point and we can now rebuild the bank from here,' executive chairman David Hodgkinson said.

Dublin has pledged to radically shrink its banking system as part of an EU-IMF bailout and AIB will be one of two so-called 'pillar banks' left from what was once a crowded field.

AIB is hoping that 2010 will mark the nadir in terms of group losses but it has said it is too early to call the peak in arrears. The IMF slashed its 2011 growth forecast for the Irish economy to just 0.5 per cent from 0.9 per cent on Monday, underlining the challenge ahead.

Dublin has put a 70 billion euros price on drawing a line under its banking crisis and AIB is second only to Anglo Irish, the poster child for Ireland's casino-style property lending, in the burden it is putting on recession-weary taxpayers.

'There was almost a kind of collective madness, everyone went crazy and for a very long time,' said Hodgkinson.

A charge of 6 billion euros, representing 5.25 per cent of loans, against potential losses helped drive AIB's loss, a company record, and more than four times higher than the 2.3 billion euros shortfall generated in 2009. – TradeArabia News Service




Tags: Jobs | Dublin | loss | AIB | Allied Irish Banks |

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