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Banking jobs at risk in slowing SA, says finance union

Banks may reduce staff to counter expected pressure on the top line.

South Africa’s biggest banks are expected to consider reducing staff numbers this year to control costs as rising interest rates, a slowing economy and weakening rand weigh on earnings, according to finance union Sasbo.

Last year was a “fairly sedate year in terms of restructuring, but we expect 2016 to be different,” Eugene Ebersohn, Johannesburg-based spokesman for labour group, said in an e-mailed response to questions. “Each bank will have to engage us first and we will have to try and mitigate the effect on our membership.”

Inflation is expected to breach the central bank’s 6% target for most of the year, while the International Monetary Fund has forecast that Africa’s most-industrialised economy will grow just 0.7%. Companies that cut jobs risk criticism from the government and unions because of the country’s 25% unemployment rate, the highest of almost 40 emerging-market nations tracked by Bloomberg. Mining companies are already under scrutiny for plans to cut 32 000 people this year. 

Bank employees face lower pay, redeployment or job losses in 2016, said Neelash Hansjee, banks analyst at Old Mutual’s Cape Town-based investment unit. “Staff cost is the single largest cost item for the banks. This would be one of the starting points for cost efficiencies.”

The country’s four largest banks employed more than 165 000 people by June, according to data compiled by PricewaterhouseCoopers, with Standard Bank Group the biggest employer and Nedbank Group the smallest.

Reducing staff to curb expenses could be one option “given the expected pressure on top line in the coming year,” said Sam Moss, a Johannesburg-based spokeswoman for FirstRand, Africa’s biggest bank by value. “Our businesses will be very focused on cost management.”

Standard Bank and Barclays Africa Group declined to comment. 

Barclays Africa, Nedbank and Standard Bank have been rolling out technology projects that may enable them to employ less staff, particularly for administrative functions. All of the lenders have been investing in digital products to make it cheaper to bank and interact with customers.

Most of them have combined business units to trim expenses. FirstRand said it has implemented austerity measures, such as cutting back on business-class flights and high-end hotels.

Nedbank integrated its retail and business banking units as well as its corporate and investment divisions and consolidated regional offices to cut costs, said chief executive officer Mike Brown. “IT expenditure will likely continue to increase as we improve our digital offerings and comply with an escalating regulatory agenda. We continue to carefully monitor headcount growth.”

©2016 Bloomberg News

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