BoI losing €10mil/day

Capri

At last, figures the ordinary Joe can understand - losing €10mil/day WHERE ? Is there a neverending fire burning in BoI's vaults ?,

Is there a computer glitch that's allowing Russian / Nigerian mafias syphon off cash ?

Are the employees carrying home bundles of cash every evening ?

There IS an answer, and it's the beginning of fixing the problem. You have to start at the root of the problem - pensioning off experienced bankers and sending the work to 'kids on computers' in outer Siberia isn't going to help ( Ask Ulster/RBS ), maybe closing branches and transferring the work to AnPost might help, but PO's are not banks so their security / systems will have to be beefed up :cool:

Hopefully the 'managers' can see outside the box that says 'Reduce staff to cure problems' :eek:

Losing €10m every day is clearly not a viable strategy

TO LOSE a sum equivalent of half your market capitalisation is clearly not sustainable. With Bank of Ireland now losing almost €10m every working day, it is clearly time for some real cost cutting.

While the bank likes to see itself as the 'comeback kid' of Ireland's battered financial services sector, the reality is that senior management has been slow to follow other lenders and make the drastic cuts needed to bring costs in line with the bank's much reduced size.

The foot dragging stands in contrast with National Irish Bank which has already shed more staff than its much larger rival and now plans to close most branches and force customers to use the post office for ordinary transactions.

Allied Irish is following suit; cutting 2,500 jobs, closing a raft of rural branches and pushing customers towards the post office and the internet which is where many people have moved anyway as lifestyles and expectations change.

Richie Boucher, Bank of Ireland's tough and taciturn chief executive, was not giving his plans away when it comes to job cuts yesterday, but this coyness cannot continue indefinitely. His bank has no choice other than to belatedly follow AIB and NIB.

The bank seems to be eyeing job cuts of just over 1,000, which seems rather small. It currently employs 13,400, and figures quoted in the annual reports suggest its workforce has only shrunk by around 3,000 since the bust began in earnest in 2008.

Job losses

A further 1,000 job losses would hardly mirror the much deeper decline in the size of the bank's businesses.

All the signs are that we are not depositing or borrowing much anymore. Deposits fell in the first six months of the year, but the really eye-popping news from yesterday's first-half results was the decline in total lending to €98bn, compared to €146bn back in September 2008.

The rapidly shrinking loan books answers two questions that have long puzzled those who study the Irish economy. Are banks open for lending, and why has domestic demand not picked up.

One of the reasons why forecasts of economic revival have been so consistently premature is the failure of economists to understand that saving and borrowing patterns have changed for good.

People have stopped borrowing and are paying off debt at a ferocious rate. Bank of Ireland's lending figures reflect this -- just as they undoubtedly reflect the fact that banks are only lending in rare cases these days. Reducing your loan book by a third can only happen if consumers don't want to borrow and banks don't want to lend.

The good news for those starved of credit is that the bank's ambition is to reduce total lending to around €90bn which means that it only has another €8bn to shave off lending before it reaches some sort of equilibrium. Like the other lenders, Bank of Ireland is entering a new phase. The worst of the storm appears to be over and a period of cost cutting, consolidation and rebuilding lies ahead. This will require different skills to the skills that were necessary to survive a tornado.

Banks are going to have to communicate endlessly with staff and customers as the cost of borrowing rises and the quality of services worsens.

NIB has already seen deposits fall by a third as customers move elsewhere.

Managing a bank these days requires sensitivity and tact. It will be interesting to see which succeed and which fail at the next hurdle in the steeplechase to nurse the country's lenders back to health.

chris85

Your analysis is brutal. They are losing money a lot from impaired loans. They have wrote down the value of many loans/mortgages which they wont recover. They have less cash being put as savings for them and the property they invested in back in the boom has nose dived. Further to that they lose money on free banking (which is why they changed criteria for it).

okiss

The boss of bank of ireland said recently we will not close any of our branches - where will these 1,000 job losses come from?
Bank of Ireland will go down the route of closing branches in the next 2 years as it will save them money.
20 years ago getting a job in the bank was regarded as a good job but now if you work in a bank you don't want to tell people.
All of the banks were trying to keep up there lending figures during the boom or trying to compete with anglo for business at this time. They made stupid decisions in the boom and are now paying for this.
The people who made these decisions are now gone but the people at the bottom are getting the abuse on a daily bases about the fees, lack of staff in branches ect.