There would be no more retrenchments for the foreseeable future, Standard Bank CEO Jacko Maree said at a media briefing on Friday afternoon.
“We are not contemplating any further retrenchments or restructuring programmes; this is enough,” he said.
He said if the bank had not acted now, the situation could have been much worse.
“As a responsible management team, we had to do something. We can’t just hope it will get better; it would not be prudent of us,” said Maree. “We can’t craft plans for the next few years based on hope. We had to take action on the cost front.”
Sim Tshabalala, head of Standard Bank South Africa, explained: “We had to do something now, and not wait for the situation to deteriorate further.”
The latest estimate of retrenched staff is 1 305 permanent positions (1 145 in South Africa and 160 in London), which amounted to 4% of the South African workforce and 13% of the London workforce. The numbers of contractors’ jobs lost is between 600 and 710 in the local market and 110 in the United Kingdom.
“People are incandescent with rage; people are very angry,” said Tshabalala. “It’s been a very difficult year. But people also understand that it had to be done. We’re working hard to deal with it.”
Counselling services have been made available and Tshabalala said the bank was in consultation with other institutions about job placements for their retrenched workers.
He emphasised what have been cited as reasons for the retrenchments: pressure on revenue, the shrinking economy, falling demand for credit and lower interest rates.
Standard Bank’s income for the first half of 2010 was down from June 2009, but higher than any of the preceding years. However, the return on equity — the money that shareholders earn on their investment — has dropped steadily since 2006, and was now at 13,5%. The amount of money lent by the bank had also decreased.
‘Strong short-term action’
The primary indicator of efficiency — the cost-to-income ratio — is up at 58,1% at the end of June and is the highest of the four major banks. This is largely due to staff costs, which make up more than half of the bank’s total operating expenses.
Tshabalala pointed out that the bank’s ration of managers to executives was too high. “It is above the global average, which is about 20%. We’re sitting at 31% management to 69% general staff.”
He also noted that the bank had tried to reduce staff costs by freezing new recruitments and not renewing short-term contracts, but that more drastic measures were now needed.
“We’ve taken strong short-term action to benefit the company’s sustainability in the long term,” he said. “It’s less about reducing the workforce as it is about reducing staff costs.”
Tshabalala explained the bank’s unwillingness to engage with media this week due to the ongoing negotiation process and “the sensitivity of the bank’s relationship with our employees”.
Tshabalala and Maree affirmed there had been “no undue pressure” from shareholders, other than the questions they would normally ask about revenue. They also emphasised that these retrenchments did not mean a change in Standard Bank’s growth strategy; if anything, it would simply mean a slowdown in some areas.
Said Maree: “As a management team, we have to try to manage the variables under our control; to slow cost growth and increase revenue.”