The global financial crisis, world recession, sluggish economic recovery, low interest rates, falling credit demand and revenue pressure have resulted in Standard Bank Group carefully re-examining its cost base and the way in which it operates.
This necessitated a detailed analysis of all operating costs across the Standard Bank Group, including staff costs, with emphasis on managers and executives within the various "head office" environments, particularly Johannesburg and London.
Standard Bank Group has introduced numerous cost-cutting measures including delaying and downsizing various IT projects, freezing the recruitment of new employees in certain parts of the business , reduction in professional fees for consultants, significantly reducing marketing and sponsorship costs, and cutting travel and conference costs.
Following Standard Bank Group's decision to consider retrenchments, it has over the past few weeks been in consultation with Sasbo, the majority South African union in the bank, and in personal consultation with all affected employees for the past week. In London, Standard Bank Group has formed an appropriate collective consultation forum.
At this stage in the process about 1 145 employees are expected to be retrenched in South Africa. This makes up 4% of Standard Bank Group's total South African workforce. In addition, 600 contractors are expected to be made redundant.
Of the impacted permanent staff, 65 are executives, 670 are managers and 410 are general staff. The focus has been on the head office environments - only 40 employees outside of the Johannesburg head office are likely to be retrenched.
In London 270 people will be made redundant, which includes 160 permanent staff and 110 non-permanent staff.
Selection of positions in both South Africa and London was based on operational requirements and not individual performance.
Regrettably, there will be limited redeployment opportunities for retrenched employees. All retrenched employees will be provided with ongoing support in their search for alternative employment. Professional counseling services are available and Standard Bank Group will also be providing financial planning and advice. Appropriate outplacement and search firms have also been engaged to assist employees.
"This has been a deeply saddening process for me and my executive team, but we knew that if we did not take action now, we would have had to take even more drastic measures later. We firmly believe that this initiative is in the best interests of Standard Bank Group, its employees, customers, clients, capital providers and society in general," says Standard Bank Group Chief Executive Jacko Maree.
"We understand that this has been a very difficult and challenging period for our employees, but we have tried to manage this process fairly while respecting our employees' rights and dignity. This is about ensuring the long-term sustainability of our business, which in turn impacts on our ability to contribute to the future of South Africa and its people," says Sim Tshabalala, Chief Executive, Standard Bank South Africa.
Mr Maree said that at Standard Bank Group profits and revenue had slowed down, loans and advances had reduced and the cost to income ratio had deteriorated.
"The actions that we have taken will eliminate inefficient duplications that had existed in our business. The full impact of the cost reductions on our business is still being assessed."
Mr Maree and Mr Tshabalala said that Standard Bank is still committed to its growth strategy, with Africa at its core. "Standard Bank is a successful, well capitalised business with a strong balance sheet and we remain excited about where the business is going. The process that we are going through is aimed at ensuring that we improve our long-term competitive position."
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