Bank Unions' Fears Of Job Losses When The Financial Sector Is Reorganised Are Likely To Be Realised.
Issued : 22 October 2008
By Anne-Marie Walsh Industry Correspondent
Bank Unions' Fears Of Job Losses When The Financial Sector Is Reorganised Are Likely To Be Realised.
Finance Minister Brian Lenihan said last night if there was private investment, he would ensure the public interest was served.
But the minister is not in a position to guarantee that all the banking jobs will be saved if there is consolidation in the sector or private investment, according to political sources.
The current negotiations on the future of the banking sector feature both recapitalisation and reorganisation of the existing banks.
The merging of certain banks is likely to result in cost cutting and staff reductions.
The banking unions have claimed there will be huge job losses if the Government allows private equity firms to seize control of Irish financial institutions.
Last night, the Department of Finance moved to assure the public that it would guard their interests. "The Government has stated that if private investment occurs in the financial sector, it will ensure the public interest is protected," said a spokesperson.
"The Government's core objective is to ensure that the financial institutions can act as a motor for our economy in supporting Irish businesses and jobs.
"Protecting jobs in the economy is part of the public interest," the department spokes- person added.
The minister insisted he had not ruled out other options to recapitalise the banks and rejected suggestions that all private investment was a threat.
"The banks have demonstrated a capacity to attract foreign investment," he said.
"Jobs are dependent on foreign investment and we cannot characterise all private equity investment as predatory and a threat."
News of a potential bid by equity consortiums for Bank of Ireland has sent shockwaves through the sector with unions accusing the investors of attempting to make a "quick buck".
But the Government has rejected the claims, saying its core objective is to protect the interests of the public.
It is understood that private equity house JC Flowers may be set to join Cardinal Asset Management in a proposal being considered by Mr Lenihan.
He is under extreme pressure to come up with a workable recapitalisation plan to save the banks from the impact of significant bad loans after unions accused him of a "lack of leadership" yesterday.
The Irish Bank Officials' Association made an impassioned plea to the Government to reject any substantial investments by equity funds and instead issue bonds.
General Secretary Larry Broderick said private equity investment would be a disaster for Bank of Ireland's customers, staff, shareholders and the country.
The union also warned that over 3,500 jobs would be "surplus to requirements" if a merger of Bank of Ireland and Irish Life and Permanent went ahead, with more redundancies to follow if there was further consolidation.
