Banks to Downsize Staff, Close Redundant Branches to Save Cost

As businesses begin to get in shape for activities in the new year, there are strong indications that com­mercial banks in the country are seriously tinkering with the idea of embarking on in-house cleaning of its operations and reorganisation.

The reorganisation, Daily Inde­pendent learnt, may involve staff rationalisation, which was suspend­ed last year, closure of redundant branches and other management issues to free their books of avoid­able expenses.

Already, banks that are heavily involved with outsourcing firms to run their marketing and retail de­partments have drastically reduced the number of outsourced staff in the system.

In May last year, some banks, in the thick of the lockdown, made attempts to lay off some members of staff in anticipation of facing the backlash of the coronavi­rus impact on the economy but the Central Bank of Ni­geria (CBN) intervened.

The CBN and the Bank­ers’ Committee ordered all banks in the country not to retrench or lay off any staff of any cadre (either full-time or part-time) while the apex bank also said that its approval must be sought if it becomes absolutely nec­essary to lay off any such staff.

The decision was taken at a special meeting of the Bankers’ Committee con­vened to further review the implications of the COVID-19 pandemic on the Nigerian banking industry.

“The committee partic­ularly deliberated on the issue of the operating costs of banks in view of the dis­ruptions emanating from the global economic difficulties and decided that in order to help minimise and mitigate the negative impact of the COVID-19 pandemic on fam­ilies and livelihoods, no bank in Nigeria shall retrench or lay off any staff of any cadre (including full-time and part-time).

“To give effect to the above measure, the express approv­al of the Central Bank of Ni­geria shall be required in the event that it becomes abso­lutely necessary to lay off any such staff. CBN solicits the support of all in our collec­tive effort to weather through the economic challenges oc­casioned by the COVID-19 pandemic,” the CBN said in a statement.

However, some notable Tier 1 banks, while shelving the idea of laying off their staff, restructured salaries.

Following the assurances to shareholders that the bank is considering new ways to ef­ficiently withstand the effects of coronavirus pandemic on businesses, a top lender, Access Bank, announced that it is restructuring sala­ries “across the institution as a result of the impact of COVID-19.”

“We are today, as an institution faced with the current economic crisis resulting from the pandemic, we have taken certain measures to control costs across the insti­tution at all levels, to achieve greater efficiency and contin­ue to run a profitable busi­ness post-COVID-19,”
 Herbert Wigwe, the bank’s Group Managing Director and CEO, had said in a statement.

After the CBN’s interven­tion, which was at the height of the coronavirus pandemic last year, CEOs of banks in the country elected not to car­ry on with the planned ratio­nalisation and pledged not to cut any jobs in 2020 because it was the wrong thing to do.

However, as bank exec­utives prepare for another round of possible lockdown and extended recession and loan losses that come with it, lay-offs are back on the table, said consultants, industry insiders and compensation analysts.

Economists and execu­tives expect the economy to take longer to recover from recession, with high unem­ployment into 2021 and the idea of staff lay-off may not be unexpected.

On top of that, working from home has shown some managers that they need few­er employees to do the same amount of work.

According to Stephen Iloba, an economist, “No question, lay-offs will come across the board for all the banks.”

“Bank staff could shrink by an average of 5-10 percent mainly at mid-and lower levels in technology, human resources and finance depart­ments,” according to Global banks bleeding.

HSBC, the behemoth in­ternational bank, last year announced it would reignite its prior plan for a massive 35,000 job cut. The lay-offs were originally slated to start back in February, but HSBC placed the layoffs on hold during the COVID-19 pandemic.

In light of the current challenging business climate, coupled with falling profits, the bank claims that it has to act now to rein in costs. HSBC will also enact a firm-wide hiring freeze.

JPMorgan Chase & Co. al­ready cut around 100 jobs as of mid-July 2020, according to comments on social media. People who said they worked in three divisions – the com­munity and consumer bank, the commercial bank and the corporate and investment bank – said they were let go.

Wells Fargo & Co. resumed cutting jobs in August 2020 after putting lay-offs on hold in March. The affected staff have so far been in technol­ogy and retail banking, and management is planning thousands more lay-offs this year and next, sources said.

Among global banks, Standard Chartered PLC and HSBC Holdings PLC have let go of several hundreds of employees last year. Standard Chartered plans to lay off a few hundreds more this year and early next year, accord­ing to bank sources.

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