The Irish Bank Official's Association has rejected the AIB Group's latest cost cutting proposals, including those on pensions, from the bank's management.

The association says its members are willing to take industrial action if the bank imposes the changes without agreement.

The bank, meanwhile, says it is agressively targeting measures to reduce the group's costs.

Speaking today at AIB's Annual General Meeting, chairman David Hodgkinson said that along with its severance programme and initiatives on pay and benefits, the group also wants to reduce the cost of external resources, its branch network and technology.

The bank is looking for 2,500 redundancies, for staff to take a pay freeze until the end of 2014 and for changes to their pensions.

After a meeting between IBOA and the bank's management this morning, the finance union said staff had already made sacrifices and a majority of its members are prepared to take litigation or industrial action over the moves.

At the AGM, the chairman said that pension cuts are fundamental to the survival of the bank. Shareholders heard that the bank is prepared to write to its former directors about making voluntarily returns of some of their pension earnings.

AIB Group's chairman says the bank's board has been working "extensively" on its strategy for the future of the bank, and details of this will be announced next month.

The chairman also said mortgage arrears had grown to 16% of its book, but this would hopefully stabilise next year.