As the industry prepares for an extended recession and a wave of skipped consumer loan repayments, African Bank is the first lender to put retrenchments on the table.
The bank, which was rescued in a R10bn bailout package devised by the Reserve Bank after choking under a mountain of bad debts in 2014, said on Tuesday in the worst-case scenario as many as 317 workers, or one in 10, are likely to lose their jobs in the restructuring drive.
“We have been deliberate in reducing costs in all areas of our business. The undertaking of a consultation process with our employees is the last resort to further reduce costs,” CEO Basani Maluleke said.
The layoffs come as the banking sector set aside billions of rand to cover losses from an expected spike of consumer defaults in an economy wallowing in recession and bleeding jobs after the coronavirus-induced restrictions wreaked havoc on household and business finances.
“Given the financial pressure faced by our customers, the bank has recorded a reduction in sales as well as collections, which has created excess capacity across the different business units,” Maluleke said.
The bank said of its 3,728 employees, about one-third (1,269) would be affected by the process, but only a quarter (317 employees) of those affected are likely to lose their jobs.
The retrenchments also highlight an industry-wide trend to phase out redundant jobs in bank branches as consumers turn to electronic devices for banking services in an increasingly competitive market following the entry of two new app-only newcomer banks, TymeBank and Discovery Bank.
African Bank said it had been automating processes across its operations and had made its services and products available online, as well as offline.
“Consequently, this has led to redundancies and has required the bank to evaluate its current resource capacity, which may necessitate reducing duplication of functions,” the company said.
African Bank is in the middle of transforming itself from a primary unsecured lender to a bank with a wider suite of products after collapsing under a mountain of highly lucrative but risky consumer credit in 2014.
It recently secured approval from shareholders that include the Reserve Bank and the Public Investment Corporation to tap the debt capital markets to raise R8bn over the next few years if required.
Maluleke has also detailed a new strategic growth plan that includes expanding the business, which is sitting on R5.4bn cash, through acquisitions to remain a long-term competitor in the increasingly crowded banking market. (Business Day SA)
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