Make no mistake, two years on from the initial injection of state funds, Irish banks are still in one hell of a mess.

Standard & Poor’s joined Fitch in downgrading Ireland’s sovereign rating to AA- over concerns that the cost of the banking bailout could rise to €50bn (way off the mark, according to NTMA chief executive John Corrigan). And Irish Nationwide and Anglo Irish’s belated transfer of the second tranche of loans to NAMA came at a hefty ‘haircut’ of 72.4% and 61.9% respectively.

As Bloomberg points out, raising capital has just become a lot tougher for Irish banks.

Clearly, it’s looking grim and further redundancies seem inevitable. Heavy rumours have already been circulating about the looming prospect of thousands of job cuts at AIB, and whether Bank of Ireland will add to the 750 roles already facing the axe. Meanwhile, further cuts at Anglo have been anticipated for some time now.

“I can’t see headcount doing anything but shrinking in the Irish banks, possibly by thousands over the next couple of years as banks revert to a domestic focus utility system,” says Brian Lucey, associate professor in finance at Trinity College, Dublin. “Back office functions, branch level posts and head office positions are all at risk.”

Despite all this, there are a few reasons for optimism around the Irish banking employment market:

ALL domestic banks are in the market for contractors

According to various recruitment sources, AIB, Bank of Ireland, Anglo, Irish Nationwide and even EBS are currently hiring people on long-term contracts.

“A lot of people working in contract positions are moving on when a permanent opportunity arises, which creates continual churn and therefore a need to recruit,” says Eoin Blake, director of headhunters Lincoln Search & Selection.

“Banks are recruiting for long-term contracts around specific projects, for roles including loan restructuring, credit modelling and market risk,” adds Andrea Clarkson, manager, financial services at Premier. “These can be quite technical roles, so unfortunately it’s often not possible for those with a retail banking background to switch across.”

(Very) small start-ups are hiring

With banks firing and scaling back their operations in Ireland, some entrepreneurs are spying an opportunity and hiring, according to Lucey.

“A lot of our Masters students, at least those who have stayed in Ireland, have been hired by start-up operations – often no more than three to five people, who have come out of the domestic banks – that are offering bespoke corporate finance, mortgage securities, specialised trading companies or other niche areas. The numbers aren’t huge, but this is a positive,” he says.

Permanent positions are emerging

Whisper it, but Ireland’s domestic banks have started hiring on a permanent basis again. As we’ve pointed to before, Bank of Ireland (and others) have been adding business bankers and, according to recruitment sources, one mystery domestic bank has been advertising for around 20 roles in local and UK newspapers.

Some people are leaving voluntarily

Much has been made of the fact that many people have been raising their hand when redundancies arrive rather than being forced out the door (think back to Anglo’s programme). Rather than simply being a PR point-scoring exercise, there may be some truth in this.

“Many people we’re placing that have come out of the Irish banks were close to retirement and opted for voluntary redundancy,” says Clarkson. “They’ve been in a position of responsibility and now feel it’s an opportunity to use their skill-set in the flexibility of a contract role without the pressure that permanent managerial positions bring with them.”