The Irish Independent has established that the Department of Finance was told weeks ago the bank was working on a plan to remove cash-handling facilities from 70 branches.
Officials knew the specifics of the cashless plan four working days in advance of it being announced – longer than it took the bank to do a U-turn – and failed to intervene.
It has now emerged that last week, the Department of Finance was fully briefed on the specifics of the plan to strip cash and cheque services from the branches and rip out their ATMs.
Officials in the Department did not respond to the briefing by telling the bank not to go ahead when it was told about the specifics of the controversial move, it is understood.
It comes as AIB was forced into an embarrassing U-turn yesterday on its plans to make so many branches cashless facilities, after a massive backlash from the public and rural TDs.
Taoiseach Micheál Martin had sought a meeting with the bank’s CEO, Colin Hunt, after calling on the bank, while on a visit to Asia, to “reflect and reconsider” its decision to remove cash facilities at the branches across the country.
The revelations that AIB had briefed the department come after Minister of State at the Department of Finance, Seán Fleming, insisted that he, Finance Minister Paschal Donohoe and the Government had been “blindsided” by the decision.
He said Mr Donohoe and his department had only been informed shortly before it was announced.
When asked if the Government was caught napping on the issue, Mr Fleming said yesterday, “The Government was blindsided by this decision.”
He said the department was given very short notice of the decision and there was no opportunity to discuss it.
AIB had no comment when asked if it had briefed the department well ahead of the announcement to downgrade the branches.
However, the Department of Finance has confirmed that it had an official at the AIB board meeting where the decision to axe cash at the 70 branches was discussed.
Information about what was discussed at this meeting was then “passed up the line” to other officials in the department.
The department was also formally informed on Friday by AIB of the full specifics of the planned downgrading of the branches, four days before it was publicly announced on Tuesday morning.
A spokesperson said: “A department official was first notified of the AIB press release on Friday. That information would have been sent up the line and the minister was informed the following week.
“The information provided was by way of a courtesy call, and was for information purposes only.”
The spokesperson said the Minister for Finance is precluded from intervening in commercial and operational decisions in any particular bank, even one in which the State has a shareholding.
Officials from the Department of Finance are informed of issues discussed at AIB board meetings by way of a board information pack, the spokesperson said.
Meanwhile, Fianna Fáil backbenchers are claiming a victory after the U-turn, after Cork TD James O’Connor, with the support of 40 TDs and senators, demanded an emergency meeting with the Finance Minister over AIB’s move.
“There was enormous anger within Fianna Fáil,” said Mr O’Connor said yesterday.
“This is something that really does separate Fianna Fáil and Fine Gael when it comes to policy and rural economy and services. Fianna Fáil recognises the significance of bank branches when it comes to people’s day-to-day finances.”
Roscommon Senator Eugene Murphy said a similar campaign now needs to take place to address recent Bank of Ireland branch closures.
Dublin Bay South TD Jim O’Callaghan said public interest directors, who sat on the AIB board until 2018, should be brought back.
Mr O’Callaghan also said “many members” of the board do not live in Ireland and do not know the “needs and requirements of its Irish customers”.
“Government should look again as reappointing public interest directors to AIB if its out of touch board is not prepared to reflect the interests of its customers and its dominant shareholder,” he said.
Meanwhile, finance union FSU said AIB urgently needs to appoint consumer and worker directors to its board to rebuild trust after the record tracker mortgage fine it got, and the debacle over its attempts to downgrade branches.
General secretary John O’Connell said there was an urgent need to rebuild trust in the retail banking sector.
“A stakeholder approach to banking, common across the EU, should form the basis of change,” he said.
And advocacy group Age Action said there is a need for a new inclusive banking model where everyone can get access to affordable and accessible banking facilities.
Older people would have been the big losers if the bank went ahead with its plans to downgrade the branches, Celine Clarke of Age Action said.
AIB said it took the decision in light of what it called the “customer and public unease” toward the move to stop accepting cash at so many branches and pull ATMs out of those branches.
It said there has been a dramatic rise in the use of digital banking services and a decline in branch visits and cash usage.
There has been a 36pc decline in cash withdrawals from ATMs and a 50pc fall in cheque usage over the past five years.
AIB has also seen a fall of almost 50pc in branch over-the-counter teller transactions, while mobile and online payments have increased by 85pc in that same timeframe.
“It was in the context of this evolving banking environment and the opportunity to enhance its long-standing relationship with An Post, that AIB took the decision to remove cash services from 70 of its branches.
“However, recognising the customer and public unease that this has caused, AIB has decided not to proceed with the proposed changes to its bank services,” the bank said.
The move represents an embarrassing climbdown for AIB boss Colin Hunt.