Union set

Finance union poised to collide with banks with demand for 6% wage hike

The Financial Services Union (FSU) appears to be on a collision course with major retail banks after saying it would call for a 6% pay rise for industry staff to help them cope the skyrocketing cost of living.

The expected demand comes as the state’s three remaining retail banks, in which taxpayers have significant stakes, seek to contain costs to establish their profits at levels acceptable to investors in an era of interest rates. ultra-low and low growth of the loan portfolio.

“The backdrop to the payment negotiations this year is that all of our major retail banks have reported a return to profitability in 2021, much earlier than any of them had anticipated,” he said. FSU General Secretary John O’Connell said, noting that lenders are also planning to start paying dividends again next year after regulators called on the industry to freeze payments at the height of the Covid crisis. 19.

AIB and Bank of Ireland delivered a combined net profit of 613 million euros for the first half of 2021, compared to a loss of almost 1.43 billion euros for the same period last year, when the two constituted large provisions to cover expected bad loan losses resulting from the pandemic. AIB started releasing some of the money in the first half of this year, as loan losses are not expected to be as high as previously feared. Analysts expect Bank of Ireland to release some of its reserves in the second half of the year.

“A turnaround in the banking industry is welcome, but it is the union’s role to argue and campaign for the benefits of success to be shared,” O’Connell said at a meeting on Thursday. general council of the FSU. “If the dividends flow to shareholders, staff have every right to expect an appropriate reward for their enormous contribution to providing a stable banking system throughout the pandemic. “

Inflation

Irish consumer prices rose at an annual rate of 5.1% in October, down from 3.8% a month earlier, according to the Central Statistics Office (CSO), amid global inflation this year as economies reopened after the worst of the crises. coronavirus restrictions.

Mr O’Connell said the remaining banks in the market are expected to benefit from a decrease in completions – referring to the planned exits of Ulster Bank and KBC Bank Ireland – as well as a growing economy. Bank of Ireland, Permanent TSB and AIB are preparing to share most of the combined Ulster Bank and KBC Ireland loan portfolios.

Still, analysts say the increased scale these loan deals will bring, along with the job cuts implemented by the remaining players, only give the remaining banks one chance to rebuild profitability to 8-10 times. capital – a level that investors see as a sign of healthy banks.

The returns on equity for the three operating banks were between 3.1% and 6.6% in 2019, before the pandemic hit.

AIB chief executive Colin Hunt was asked on Thursday at a virtual conference – the Financial Services Leaders Summit – about Ulster Bank and KBC Ireland’s decisions to exit the market.

“I guess the parent groups decided that the returns required to meet investor demand just weren’t available to them,” he said.