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Allied Irish Banks staff unwilling to take pay cut

While the Irish authorities struggle to balance the government books, hopes of a pay cut across the Irish financial sector took a significant hit today, with news that staff at Allied Irish Banks are unwilling to take a pay cut and reduced pension contributions. The two-year deal would have seen a two-year pay freeze and reduction in pension benefits as the bank struggles to survive after becoming embroiled in a number of financial scandals over the last few weeks.

The bank is now committed to raising around €1.5 billion to bolster its core tier 1 capital ratio by the end of 2009 to complement an investment of €3.5 billion by the state. This is quite literally a last throw of the dice from Allied Irish Banks which stands on the verge of nationalisation if it is unable to raise significant capital and bolster the balance sheet.

The situation regarding Allied Irish Banks is a reflection of the wider Irish banking community which has suffered a significant collapse over the last few weeks prompting rumours that the Irish government will be forced to go cap in hand to the International Monetary Fund. The fact that banking staff are being asked to give up wage rises and pension benefits has not gone down well with Irish unions, causing a significant problem for the Irish authorities.

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