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AIB's cost-cutting plan rejected by bank union

The main banking union here has rejected proposals from First Trust owner AIB aimed at cutting costs at the Irish state-owned bank.

The Irish Bank Officials Association (IBOA) turned down the bank's plan to close its defined benefit pension scheme and to extend an ongoing pay freeze for ordinary staff until the end of 2014.

It said the savings the bank has already made by reducing staff numbers and potential future savings from planned restructuring should be more than enough to meet cost reduction targets.

"The move on the defined benefit pension scheme would produce relatively modest cost savings for the bank - but would have a significant impact on the retirement income of many ordinary bank officials," union general secretary Larry Broderick said.

"As for the proposal to freeze pay until the end of 2014, our members throughout AIB Group have already endured a pay freeze since 2009.

"Some of our members have even been denied contractual payments, such as increments and performance awards, and unlawfully so, in the view of recent industrial tribunals in London and Belfast."

The bank declined to comment on the proposals, but in an email to staff yesterday which outlined the plans, it said: "We need to ensure that the cost base of the bank is more properly aligned to the operating performance of the group and to ensure the future viability of the bank.

"It is imperative that the cost base of the bank is sufficiently aligned with the overall operating performance to attract external investors."

Aside from the proposals aimed at ordinary staff, the email said the bank's executive committee had agreed to a 15% reduction in total pay - those in executive roles would take a 10% cut while senior managers will take a 7.5% reduction.