aib - an overview
AIB group is Ireland’s leading banking and financial services organisation. It operates principally in Ireland, Britain, the USA, Poland and Asia.
The group employs over 31,000 people worldwide in more than 1,000 offices.
The group has four main divisions:
· AIB BANK: This consists of the group’s retail and commercial activities in the Republic of Ireland, Northern Ireland, Britian, the Channel Islands and the Isle of Man. It also includes Ark Life and other specialist business offering credit card, car finance and leasing, home mortgages and other services. More than 10,000 staff work for AIB Bank operating out of over 300 outlets.
· AIB Capital markets divisions comprises the Treasury and International Investment Banking and Corporate Banking activities of the group.
· USA division includes Allfirst and AIB’s American outlets and employs around 6,500 people.
· Poland division where AIB has a major shareholding in two Polish banks employing over 12,000 people and giving the bank access to one of Central Europe’s largest economies.
AIB is the republic’s biggest bank, with record profits of almost €1.4 billion for 2002. The record sum was delivered against a backdrop of worsening domestic and international economic conditions. It also came after a €643 million fraud at its US subsidiary All First.
According to the Consumers’ Association of Ireland, the banking sector in the Republic is characterised by a lack of choice for consumers. The association’s chief executive Dermott Jewell says AIB’s massive profits are proof that none of the money generated by financial institutions is finding its way back into the pockets of customers.
Clearly comfortable in a non-competitive environment, the Irish banks have also displayed an unwillingness to offer customers any choice when it comes to mortgage products. In the UK there are about 120 mortgage lenders offering 4,500 products. In the Republic there are 12 main players offering about 70 products. That means the average British lender offers 37 products while its Irish counterparts offer just six.
In the past, the banks have also been slow to pass on the European Central Bank's interest rate cuts. While many European banks pass on the cuts almost immediately, the Irish institutions have sometimes waited for a number of days before acting, although their own economists have often predicted the cuts long before they happen. However, if the ECB increases rates, the Irish banks are very quick to pass the increases on to the consumer.
It is pretty obvious that that the dominance by Bank of Ireland and AIB of the Irish market for financial services is killing competition and, in the process, forcing the public to overpay for loans and other services.
The Republic's two biggest banks - AIB and Bank of Ireland - control 80 per cent of all current accounts and, despite claims that this is largely a loss-making undertaking, Davy suggests they could earn more than €150 million this year from [next page]