DUBLIN (Reuters) - Allied Irish Banks (AIBG.I) (AIB) has imposed a temporary embargo on recruitment and promotion as part of a renewed focus on costs following a recent rise in staff expenses, a spokesman for the bank said on Sunday.
AIB reported a fall in first-half profit last month as rising costs contributed to a slowdown in its recovery from Ireland’s banking crash a decade ago, prompting management to prioritise cost discipline.
The Sunday Times newspaper said the bank, whose shares have fallen by almost 40% since it reported its results, informed Ireland’s Financial Services Union (FSU) last week of an immediate embargo on hiring and promotion.
“AIB is an agile organisation which is focussed on being simple and efficient and this is supported by a continual focus on managing costs,” a spokesman for AIB said.
“In this regard we have advised the union that a temporary hold on recruitment and promotion has been put in place in line with the bank’s renewed focus on cost discipline.”
AIB’s personnel expenses grew by 8% year on year in the six months to June 30, contributing to a 6% increase in its operating expenses to 744 million euros.
The bank put the rise down to a 3% rise in wage inflation - in line with wage growth across the tightening Irish labour market - and a 2% increase in average staff numbers over the period to almost 10,000 employees.
AIB employed almost 26,000 before the crisis.
Despite the recent rise, AIB still has the lowest cost income ratio of Ireland’s domestically owned banks at 54%.
Reporting by Padraic Halpin; editing by Jason Neely