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.