Barclays’s layoff plan targets 130 workers, to run for one month
Thursday July 13 2017
Barclays branch in Nairobi. The lender’s Voluntary Exit Scheme is open to all permanent employees. PHOTO FILE | NATION
Barclays Bank Kenya has started sending home close to 130 workers on voluntary retirement as part of cost-cutting measures to survive a difficult operating environment that has seen most lenders post lower profit.
This is the latest in a string of layoffs that has engulfed the banking industry as lenders search for options to reduce costs and enhance returns to the shareholders after their major source of income — interest income — was hard hit by the law on interest rate capping.
Rising inflation, increased energy costs, enhanced reclassification and provisioning for loans and the governments delayed payment to contractors and suppliers have also combined to increase the cost of doing business.
Barclays’s Voluntary Exit Scheme is open to all permanent employees, mostly those in the operations department and the head office. The one-month retrenchment programme started on June 19.
The exit package includes one month salary in lieu of notice and basic salary of one month for every year of completed service subject to a maximum of 24 months.
The lender will also retain interest rates on staff loans at staff rates for a period of 12 months before reverting to commercial rates, and allow the medical scheme to remain active until December 31 this year.
Pension will also be paid in accordance with the laid down rules.
READ: Barclays Kenya to close seven branches
The bank attributed the proposed layoffs to the increased uptake of digital banking that has rendered many workers redundant.
“In the past few years, we have seen a material uptake of mobile and online banking as well as other alternate channels driven by customer preference and a desire to transact round the clock at their convenience,” the bank said in a statement last month.
It added: “We have also been operating in an increasingly challenging operating environment. As a result, the bank has accordingly adapted its structure and ways of working in order to remain relevant and provide efficient banking services.”
Last week it emerged that the lender, which is listed on the Nairobi Securities Exchange is also shutting down seven outlets beginning October 1 as part of the restructuring plan.
Barclays Kenya is targeting to reduce its spending on employees that stood at Ksh9.72 billion ($97.2 million) for the 12 months to December 2016 and Ksh2.46 billion ($24.6 million) for the three months to March 31, 2017.
Last year, the Bank’s net profit dropped 12 per cent to Ksh7.39 billion ($73.9 million) from the previous year’s Ksh8.4 billion ($84 million).
In the three months to March 31, 2017, the lender’s profit after tax declined 20 per cent to Ksh1.74 billion ($17.4 million) from Ksh2.18 billion ($21.8 million) in the same period last year.
Other banks that are laying off workers to cut cost are KCB, National Bank, Standard Chartered Bank, Sidian Bank, Family Bank, sharia-compliant First Community Bank, NIC Bank and Equity Bank.
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