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2,180 Bank of Ireland jobs on line in cost-cutting move

By Gretchen Friemann

Bank of Ireland, which employs around 500 people in the province, looks set to cut its workforce on the island, with potentially 2,180 jobs on the line as the lender chases cost reduction targets.

The projected cuts to the payroll are included in a new research note on the group by Investec Ireland's Owen Callan, who retained his buy rating on the stock and described its recently unveiled medium-term growth strategy as "ambitious but attainable".

But Mr Callan calculates that the drive to lower operating costs by about 10% by the end of the 2021 financial year "implies an underlying headcount reduction of 15-20%".

He noted that while this is a "sensitive issue both politically and with unions, (it) is the required pay-off for an investment programme which will cost around €1.4bn (£1.2bn) and take almost five-and-a-half years to complete".

At the end of 2017 Bank of Ireland employed about 11,000 people, although it has seen a steady stream of departures over the past 12 months, including from its senior management ranks.

It is understood the group intends to cull over 200 roles from middle management by the end of the year, although new chief executive Francesca McDonagh has insisted on a number of occasions that she has no internal job reduction targets.

At the bank's Capital Markets Day in June Ms McDonagh unveiled an extra €500m (£444m) to its capital expenditure and investment outlay, taking the total figure to €1.4bn.

The news precipitated a fall in the lender's share price and prompted questions on how an additional €250m (£222m) would be deployed to generate "business model changes".

A further €250m was allocated to the ongoing overhaul of the group's technology platform. But Mr Callan argued shareholders should look "past the noise created by the now upsized investment programme" and claimed the group is capable of delivering an 11% return on tangible equity in FY21E with "further improvements arriving thereafter".

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