Danske Bank Ireland, formerly National Irish Bank, is to withdraw from the personal banking market to refocus on its corporate customers.
The refocus will result in the loss of 150 jobs in the Republic of Ireland.
Irish Bank Officials' Association General Secretary Larry Broderick said the job losses at the bank would be compulsory.
"We are shocked at the decision and the lack of consultation with staff and customers. We would ask the bank to reconsider," he stated.
Speaking on RTÉ's Morning Ireland, Mr Broderick said: "Staff are scapegoats for very bad management decisions of this bank."
He said the move would reduce competition in the banking sector.
"The likelihood is that we may have just three banks and, indeed, maybe two banks if Permanent TSB doesn't turn the corner with the Troika," he said.
"That’s a very serious position for customers and the Irish economy."
Danske is the second bank in Ireland to announce major changes in the space of a week after ACCBank announced it is handing back its banking licence.
Danske said existing personal and business banking would be discontinued.
It is understood deposits will be repaid and existing customer accounts will be transferred to a non-core unit and wound down.
The bank said the decision was taken against the backdrop of a difficult economic and trading environment.
Danske also said that it will now start talks with the banking unions in relation to the impact of the changes on its staff numbers.
The company has not been able to re-establish a sustainable retail banking business model in Ireland following the financial crisis.
The bank is to write to all customers in the coming weeks to clarify the impact of its move on the individual products or services they currently hold.
Activities in Northern Ireland are not affected by the decision.
The bank has reported a loss before tax of €31.4m for the first three months of its financial year and impairment charges of €22.8m.
Meanwhile, the Irish Small & Medium Enterprises Association expressed its deep disappointment at the decision and described it as a blow to SME banking prospects.
The ISME said the shrinking Irish banking system was not fit for purpose in providing an adequate retail service or development funding for Irish SMEs.
ISME Chief Executive Mark Fielding said: "It is critical to restore the Irish banking system to health and return it to its basic function of serving the Irish economy and the Irish people."