Tough times for banks’ staff as lenders cut costs
Sidian CEO says retrenchment will not necessarily result in lower staff costs, but it is a growth strategy that requires employees who are tech-savvy
Bottom-tier lender Sidian Bank plans to send home at least 108 of its 506 staff at a one-off cost of Sh70 million, it announced yesterday.
The bank is yielding to pressure in the industry to enhance efficiency amid slowing revenues.
Sidian, which rebranded from K-Rep in April, said the voluntary early retirement scheme is, however, not a cost-cutting measure. It is part of staff realignment to its transformation strategy to become tier-two lender by 2019, chief executive Titus Karanja said. He said the retrenchment will not necessarily result in lower staff costs, stressing that its growth strategy requires staff who are tech-savvy, entrepreneurial and with a “culture that supports diversity of thought”.
“We are transforming our staff into bankers of the future,” Karanja told a press briefing in Nairobi. “We are offering our people an opportunity to decide ‘do they wish to invest into becoming the banker of the future or invest in getting out now, so that we can align our people towards the bank of the future?’”
Mid-sized Family Bank was the first to publicly declare a voluntary retrenchment programme at the beginning of the month, but did not disclose the numbers targeted.
The bank said the scheme is part of its “ongoing transformation strategy that entails assessment of our overall structure and resources, with a focus on deploying capital efficiently to improve overall performance”. Interested Family Bank employees had 14 days to October 14 to apply.
The banking industry fired 2,036 staff, mostly in clerical and secretarial units, in 2015, as lenders automated their systems to enhance operations, the Central Bank said in Banking Supervision Annual Report.
The capping of interest on loans at four percentage points above 10 per cent Central Bank Rate ( 14 per cent) has put pressure on margins, which were 70 per cent driven by interest earnings before the law was enforced on September 14.
Sidian Bank MD Titus Karanja with his Centum Investment counterpart James Mworia and CBK chairman Mohammed Nyaoga at the relaunch of Sidian, formerly known as K-Rep, in Nairobi on April 4