Bank of Ireland is to reduce its workforce by around 1,400 over the coming years.

Part of it will be accounted for by a redundancy programme which employees across the group will be invited to apply for in the next few weeks.

A spokesperson for the bank said the cuts would see staff numbers reducing to fewer than 9,000, from a current workforce of 10,400.

It is understood the voluntary redundancy package allows for four weeks' pay per year of service.

The General Secretary of the Financial Services Union said the announcement was "one of the biggest cultural missteps in banking history in Ireland".

Speaking on RTÉ's Today with Sarah McInerney, John O'Connell said they were "extremely disappointed and angry" with BOI that they were proceeding with such a move in the middle of a pandemic.

He said they anticipated an announcement of this sort and wrote to the banks a few weeks ago to consider a pause given the Covid-19 circumstances. 

He said both AIB and Ulster Bank responded they would cooperate with the FSU in terms of head count and take a measured view given the current state of the economy.

The announcement, he said, made "no assessment of impact either on staff or communities".

In a statement, Mr O'Connell said he had written to Bank of Ireland CEO Francesca McDonagh seeking a pause in redundancies. He has also written to Taoiseach Micheál Martin urging Government intervention. 

Meanwhile, the Minister for Finance has said he is hopeful that compulsory redundancies at Bank of Ireland can be avoided.

Asked about the possibility that the voluntary redundancies could become compulsory, Paschal Donohoe told RTÉ's Drivetime that it is a matter for engagement between unions and the banks themselves.

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He said it was a voluntary redundancy programme, and as Minister for Finance he did not have the legal ability to play a role in the commercial decisions of any bank.

Mr Donohoe said he did have a role however in relation to the level of pay and compensation that workers get within banks. He said he did play a role in making sure the "best possible proposal" could be put to workers who were considering their future.

He said while it was voluntary programme, he understood the worry that workers everywhere are facing. He said that was why there were so many supports in place.

Asked why the move had to happen now, Mr Donohoe said he was not going to determine or prejudge what other banks may decide, adding that it was not for him to say.

He said any such announcement set against the backdrop of the pandemic was always concerning. Mr Donohoe said regrettably there are many employers making the same such decisions at the moment.

Covid-19 impacted performance

Earlier, Bank of Ireland reported a loss of €669 million before tax for the first six months of the year, after putting aside €937m, mainly to cover losses related to Covid-19 loan repayment breaks.

In its half year results, the bank said Covid-19 had a material impact on the group's financial performance and outlook.

It said the group's full year 2020 impairment charge is expected to be in a range of €1.1 billion to €1.3bn.

"We're being prudent and comprehensive in taking that large provision. Everything has to be seen through the prism of Covid-19," Bank of Ireland CEO Francesca McDonagh explained.

"Two thirds relate to expected credit losses, one third is actual credit losses. We're being quite clear to the market today that we would see the majority of the full year impairment charge - between 70 and 85% of the full year - being taken in the first six months." 

105,000 payment breaks were granted by the bank across Ireland and the UK during the pandemic lockdown period, the bank CEO said.

"(Individuals accounting for) over half of mortgage payment breaks were asking for another three months and slightly more for Irish SMEs.

"The reality is that some of those payment breaks will struggle after that second three months."

Ms McDonagh said Bank of Ireland had no intention at this time of extending negative interest rates to deposits in consumer accounts.

Bank of Ireland recently started levying an interest charge on pension customers for the cash portion of their pension pots as the banks have had to pay the ECB for holding deposits for several years now.

She explained that the bank had been absorbing the negative rates, but it has been charging large institutional and corporate customers and indicated that some larger SMEs might also be hit.

"What we did last week was we wrote to 14 pension and investment firms to inform them that we would apply negative interest rates. We're also communicating to some of our larger SMEs that if they hold, individually, cash deposits of over €2.5 million, that they will get an element of negative interest rates.

"It is not sustainable for any bank to be absorbing negative interest rates for ever more," Ms McDonagh said.

The bank expects 2020 gross lending to be about 70% of last year's figure.

In its interim statement, the bank said capital remained strong and resilient, with a fully loaded CET1 ratio of 13.6% and a regulatory CET1 ratio of 14.9%.

"Our outlook is cautiously more optimistic than our quarter one trading update, resulting in revised guidance for the rest of 2020 in terms of new lending and business income," Ms McDonagh said.