I am aware that a number of weeks ago the joint committee was addressed by senior representatives from AIB, Bank of Ireland and Anglo Irish Bank. Examining the transcripts and feedback from that meeting, it is clear to us that many of the questions raised by members went unanswered or were answered in an unsatisfactory fashion. We sympathise with the committee's predicament because we are involved in discussions with senior management right across the industry on a regular basis. We are frustrated at the lack of information being provided in addressing what we believe to be serious concerns regarding the future of the industry and our members' ongoing employment within it. Despite endless rounds of meetings, the IBOA, as the main union representing the workers, has not obtained transparent information on EU restructuring plans and the implications thereof for staff, customers and the economy.
As Ms Doherty stated, we recognise the need for change in the industry. The IBOA has been an advocate for change from as long ago as 2004 when it addressed a previous incarnation of this committee on the subject. Our members have a vital role to play in delivering that change and contributing to the programme, not only in respect of a narrow self-interest but also with regard to addressing the wider concerns of customers and taxpayers.
Our members are anxious to discover what will be the future of Irish banking in general and the institutions for which they work, in particular. They are also interested in identifying the role they will have to play in that future. They have experienced many things during the past three years, including the profession in which they previously took pride being reduced to pariah status, the shares in which their employers encouraged them to invest becoming worthless and the devastation of the economy, the institutions for which they work and the savings of customers. These developments were all due to reckless behaviour on the part of senior management. Our members have a passionate belief in the industry. They want to be part of and contribute to its future. However, our experience is that their commitment is not being reciprocated from the very top, nor is it being reciprocated by the Government at large.
The Department of Finance and industry leaders appear to be of the view that, in effect, banking employees are collateral damage and that they have no right to be treated with the due respect they deserve, have no role in shaping the future of the sector and no right to be consulted about their own personal futures, either in the context of redundancy or with regard to the restructuring of the industry. The staff of some institutions are being invited to make potentially life-changing decisions while being provided with very little information in order that they might assess the merits of the options available to them. If a credit institution were to treat its customers in that way, it would be subjected to public censure. In such circumstances, we hope that the very least that would happen would be that the regulatory authorities would conduct an investigation. However, it does not appear this modus operandi obtains within the industry.
There is a need for a passionate review of the industry in the context of identifying a structure that can deliver for taxpayers, customers and our members. Three years into the financial crisis and a picture is finally beginning to emerge of the shape of Irish banking in the context of the corporate structures which obtain. Larger questions remain about how the banking sector can best serve economic and social development. What are the implications of State ownership of five of the six covered financial institutions? What are the implications for competition and diversity in the industry? What is the role of foreign banks, some of which are state-owned in their home jurisdictions? These are issues which must be addressed in a constructive fashion.
There is also a need for a discussion on the kind of banking sector we wish to see in the future. We are concerned that in the absence of an agreed public policy framework for the sector, what may finally emerge from the wreckage of the banking system could be even worse than what existed in the past. Preserving branch networks is key and there is a need to rebuild the connection between local staff and customers. What is required is a delivery of service which will involve change and place customers and staff at the centre of that change. The type of relationship once between branch managers and customers, the loss of which Senator Barrett lamented at a recent meeting of the committee, may not be completely restored. However, we must refocus on this relationship in the context of recent statements by the chief executives of the various banks.
The new model of banking beginning to emerge on a pilot basis may represent only one way to address certain aspects of the sector. There may be alternatives to this model. Customers, in particular, may have views on the quality of their current relationship with their banks and how they would like this to develop in the future. No one is consulting or engaging with customers or staff on the form the model to which I refer should take. A conversation on these issues should take place among all stakeholders. In the past we called for the establishment of a forum on banking to which customers, the State, taxpayers, the Financial Regulator and staff would contribute. Such a forum would consider the paradigm on which we should focus in the future. What we are seeking for our members - that is, a clear vision for the banking sector - would not only be of benefit to them but also to the people.
Staff need to know where they stand. Since the crisis began, over 4,000 jobs have disappeared from the two pillar banks. Thankfully, these were shed mainly through natural wastage and the non-replacement of retiring and resigning staff. In addition, over 1,000 people were made redundant by Ulster Bank. When Halifax closed down, 700 jobs were lost. Further job losses have occurred in National Irish Bank, Anglo Irish Bank and Permanent TSB. This provides a grim backdrop to what is happening to the industry. It gets worse, however, because our outlook, with which other analysts are in agreement, is that over 6,000 jobs in the industry may be lost during the next 18 months. These are only estimates. What our members require is clarity and an indication that some action plan relating to examining employment options will be put in place.
If job losses on the scale to which I refer were occurring at a multinational company, an inter-agency task force to deal with the problem would probably already have been created and a Minister or a Minister of State would have been assigned to consider what might be done in addressing the need to retain employment. In addition, a training programme would probably have been put in place and a State agency tasked with evaluating how such job losses might be avoided. No such engagement has taken place in respect of the banking sector. This mirrors the difficulties in respect of engagement with some of the major institutions.
In April AIB announced 2,000 job losses, but six months later the position on this matter is no clearer. The areas in which these job losses will take place have not been identified; we do not know what terms will be offered to our members and we are not too sure about the nature of the redundancies. From their exchanges last month with the executive chairman of AIB, members will have observed that there is a lack of clarity at the highest level within that organisation on how this matter will be dealt with. What shocks us - I hope it will also shock members - is what Deputy Doherty managed to extract on foot of the exchanges to which I refer, namely, that the 2,000 job losses in question represent a balance sheet reduction. No justification was provided for how they would impact on services or how the matter had been dealt with in the context of engagement and there was no clarity regarding the model to be put in place. Apart from the serious concerns that raises about this approach to business it also represents an appalling way to treat staff. Employees in AIB have been told on a number of occasions in the past 18 months that the bank would be smaller, which we all recognise, but there is no clarification regarding the sacrifices staff are prepared to make to restructure the industry against a vacuum in engagement. What they want, and what we believe they are entitled to, is real engagement which allows them make an input into shaping the future of the bank. That applies both to those staff members who may want to leave as well as the staff who want to stay and whose stay will be vital to expediting the recovery of AIB which in turn will be pivotal to the rebuilding of the economy as well as the banks.
Many Deputies and Senators rightly identified concerns about the plight of staff in Aviva who have been put through the wringer in terms of their future employment but their uncertainty lasts two months. The uncertainty for staff in AIB has been going on for at least six months and lingering. Given that it is now a State bank, we do not believe that is the right way to proceed. From our perspective the systematic lowering of the morale of staff across the industry is not in the interests of the bank, the customers or the economy. The best interests of taxpayers is to have a prompt and substantial return to supporting a structure for the future of Irish banking where this union can play a key role.
A similar situation applies in Anglo Irish Bank where the Irish Bank Officials Association, IBOA, recently began to represent staff and although it is winding down our argument is that staff in Anglo Irish Bank have an entitlement to try to influence that wind down in their interests as well as in corporate terms. It is disappointing that much of the information to allow real engagement is being denied to the union in that situation. Interestingly, and not coincidentally, Anglo Irish Bank and Irish Nationwide were anti-union for many years and were converted to the role of the unions only in the recent past. If members examine the practices in those two institutions I suggest that if there had been union representation some of the extraordinary developments that have now emerged at least would have been brought to public attention.
In fairness to Bank of Ireland, while the relationship with it can be difficult at times at least there is a plan and there has been engagement, a sharing of information and an agreement on the way it processes, and the union has a particular role to play in that regard. We suggest that if there is a model on how this can be done it would be useful to guide everybody in terms of the way it can be approached.
I was struck, as I am sure were many members, by the claims by both management teams in AIB and Bank of Ireland, in their discussions with the committee, that they intend to implement a new culture in the sector. AIB spoke of new values and new behaviours being developed at the highest level in the bank, and Bank of Ireland conceded that it needed to be mindful and determined to learn from the mistakes of the past. Those are laudable sentiments which we support but it is important that members are aware, and we have shown it in the submission, that this is not being reflected on the ground as we speak.
In most of its key characteristics we believe the culture in Irish banking has remained unchanged. In a recent survey undertaken of our members they told us in no uncertain terms the following striking manifestations: the pursuit of sales still goes on; the intensity and pressure on staff through performance targets is still part of the structure, notwithstanding that they are not receiving pay increases; and such is that pursuit it is reducing staff levels and increasing the pressure on staff to gather deposits, all of which we argue must be having an impact in terms of customers. The competing nature of that in terms of a number of State-owned banks that are competing among themselves to try to achieve goals in the absence of an overall plan is not in the interests of anybody concerned.
Our concern is that many of the aspects we have identified have not changed, that is, the focus is still short-termism rather than looking at the broader perspective. That is something we believe this committee must advance through whatever structures in terms of the entire industry.
Members will be aware also of the difficulty in trying to ensure that banking leaders face up to their responsibilities in terms of the past three years. It is commonly accepted now that in various degrees they are in denial of the problem and therefore unwilling and unable in some cases to develop alternative approaches in dealing with the problem. At the same time it is galling for the ordinary staff and customers who see bank bosses walk away with golden parachutes and apparently iron-clad contractual entitlements. Our members contrast that with attempts made to undermine their contractual rights in a number of areas. Instead of gold-plated pensions they will suffer, in terms of the maximum sacrifice, as a result of losing their jobs.
What is disappointing is that there is no visible sign of accountability. We hear a great deal of rhetoric about various procedures in place but unless that changes I do not believe any lesson for senior management coming into the sector will change behaviours in any way, and that must be encouraged in a particular manner.
While there has been some evidence of new thinking, the members' exchanges with the banking leaders last month show that many issues are not unresolved. They will not be resolved if those institutions are left to their own devices. The State has a particular role. It owns the vast majority of the industry. It has a key role in terms of influencing strategy but there appears to be a dichotomy in that on the one hand it allows institutions operate as normal while at the same time not being in a position to address these issues. That is the reason a central public policy on the golden aspirations of the industry and the way we manage that in the context of managing staff is key. That is the reason we are gratified with the opportunity to address the committee.
I will conclude by making the key points in terms of what we believe must happen. We must have a complementary series of initiatives that strengthen regulation, raise customer confidence, safeguard the public investment, improve the morale of bank employees and ensure that real lending is available to generate jobs. If we can put those measures in place complementary with changing the industry, we will achieve the goal. To do that we need diversity in boardrooms and not the same boardroom structure that existed previously. We need protection for whistleblowers. That is key because there is evidence there is huge fear in our industry. We need codes of employment practice which eliminate the climate of fear. We need a major redesign of remuneration practices. As we speak, performance related pay from the top to the bottom is the strategy for pay in this industry. Has nobody learned the lesson in that regard, not that there is much payment to staff at this time but in terms of a future strategy? We need engagement in terms of the way we will manage the transformation of the industry that will result in thousands of job losses, which are inevitable, and the principles we must put in place to ensure that the staff perspective can be taken on board in a manner that recognises the social implications of that. I thank the Chairman for the opportunity to address the committee.
