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

The Star (Kenya) - - News Business - CON­STANT MUNDA @munda­con­stant

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.

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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

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