AIB BANK HAS announced that it will have to cut 2,000 jobs within the next two years, after posting an annual after-tax loss of €10.4 billion for 2010.

Releasing its annual report this morning, the bank said the total AIB group made an after-tax loss of €10.4 billion in 2010, with NAMA transfer-related losses of €7 billion – compared to €2.3 billion in 2009.

The bank said that the outlook for 2011 remained difficult, saying that “business and market conditions remain challenging”.

2010 was an extremely difficult period for AIB and all its stakeholders. It was a year that culminated in the announcement that the Irish Government was to take a majority stake in AIB. There were significant levels of credit losses, as we matched the continued downturn in the economy, in addition to the loss on transfer of loans to NAMA.

AIB’s total assets decreased from €174bn to €145bn, while a total of €18bn in loans were transferred to NAMA over the course of 2010. AIB said there were about €2bn in loans remaining to be transferred to the State’s bad bank.

In total, provisions for bad loans coupled with the NAMA impact amounted to €13 billion in 2010. Customer deposits into the bank, meanwhile, fell by €22bn across the year, down to €52bn.

The level of mortgages in arrears of more than 90 days increased significantly, from €289m (1.51 per cent of the total mortgage book) to €557m (2.87 per cent). The bank attributed this to “unemployment, wage cuts and high levels of personal debt”.

AIB and EBS are to combine, subject to State aid and regulatory approvals, to form one of two new strong universal pillar banks in Ireland. The company stated:

This new AIB will form a strong foundation from which a profitable business can be rebuilt. The speed at which AIB recovers and returns to a position of profitability and self-capitalisation is heavily influenced by Ireland’s economic prospects.

AIB says it “is fully committed to supporting customers facing financial difficulty” and “continues to actively support Irish economic recovery through providing credit facilities to meet the investment and working capital requirements of viable businesses, particularly in the SME sector”.

The forthcoming job losses follow a reduction of almost 900 in staff numbers during 2009. The bank is just over 92 per cent owned by the State.

Read the full report here >