RBS’s Ulster to Start Talks on Raising Pay for BankersJoe Brennan
Royal Bank of Scotland Group Plc’s Irish unit said it will soon start pay talks with its main labor union after it bounced back to profit, even as its parent weighs whether to sell a stake in the business.
Ulster Bank expects to hold talks on compensation for 2015 and 2016 shortly, the Dublin-based lender said in a statement today. The Irish Bank Officials Association said it will use the discussions to seek the first increase in basic pay at Ulster since 2008.
“Since Ulster Bank has recently returned to profitability for the first time since 2008, we expect that the forthcoming talks on pay will focus on ways to improve the living standards of our members,” said Seamas Sheils, a spokesman for the IBOA.
Bank of Ireland Chief Executive Officer Richie Boucher, who cut more than 2,000 jobs in the past two years, last week became the first head of an Irish consumer lender to raise the prospect of increasing pay since the nation’s financial system’s near collapse in 2008. Ulster Bank’s talks with the IBOA come as RBS weighs options for the unit, including whether to sell a stake in the bank or merge it with another Irish lender.
“Pay increases were absolutely off the agenda across all the banks in Ireland for the last number of years, but it is beginning to creep back on the radar now that banks are returning a profit again,” said Eamonn Hughes, an analyst with Goodbody Stockbrokers in Dublin. “We increased our cost forecasts for Bank of Ireland last week after they flagged it as an issue.”
Ulster Bank also agreed today to recommendations from an independent industrial relations arbitrator, Mark Connaughton, that any job cuts over the next two years should come from voluntary redundancies and early retirements. About 1,500 planned Ulster Bank job cuts remain after the lender said last year it would eliminate as many as 1,800 positions by the end of 2016, according to the IBOA.
Ulster Bank swung into a 55 million-pound ($93 million) operating profit in the first half from a 381 million-pound loss in the year-earlier period, as loan losses plunged.
RBS said last week that Ulster Bank’s cost-to-income ratio was 69 percent in the first half of the year, below its peak during the financial crisis of 84 percent, though above a medium-term target of 50 percent or lower set last year.
Bank of Ireland Plc, the nation’s largest lender by assets, and Allied Irish Banks Plc, the second largest, both said last week their cost-income ratios were 55 percent for the first six months.
Bank of Ireland “always felt that as we moved to profitability we would need to discuss this with our employees,” Boucher said at the time. A return of bonuses, banned across bailed-out Irish banks since 2009, is not on the agenda, he said.