Join Moneyweb for a post-budget webinar with Dr Adrian Saville, Dr Iraj Abedian, Sizakele Marutlulle and Dr Azar Jammine for further insights on Wednesday, 28 October at 15h30.

Bidvest Bank plans to retrench 400 employees

Will focus on moving towards digital banking.
The pandemic has accelerated the demand for digital access to financial services. Image: Moneyweb

Bidvest Bank has served its staff with a notice of possible retrenchments. The group said it has been negatively impacted by the Covid-19 pandemic, and to ensure its long-term sustainability is reviewing its operations to realign the bank to the current economic climate.

It anticipates that over 400 employees in its personal banking, business banking and support divisions will be affected. They will be notified by the end of October and serve notice in November.

In a letter to employees dated August 28, it said this has been necessitated by reduced revenues being experienced, taking into account the reduced demand for certain products and services.

“The negative impact in relation to [the] travel, tourism, leisure and hospitality industries arising from the Covid-19 pandemic and general economic factors appear to still be ongoing and currently, prospects of these industries showing any improvement in the short term remain remote, which in turn impacts extensively on our business due to our focus on forex and related products,” reads the letter.

The bank will dedicate the next month to consultations as per statutory requirements and the time period set out in Section 189A of the Labour Relations Act and the bank’s retrenchment policy.

Going digital

The bank said it is repositioning to include the move to virtual banking.

Financial director and acting MD Thinus Liebenberg said the pandemic has accelerated the demand for digital access to financial services and the decreasing need for traditional ways of interacting with banks and other service providers.

Read: As bank earnings collapse, how bad can it get?

“Bidvest Bank has also experienced a significant impact on its financial results and revenues over the last few months as a result of the Covid-19 pandemic, further compounded by general economic environment,” said Liebenberg.

“A strong digital platform in the current environment is going to be crucial to remain sustainable and competitive.”

He said the changes will result in the optimising of the branch network as well as the support areas of the bank, which could culminate in a retrenchment process.

“Taking into account the nature of the organisational changes the bank is currently considering … the bank anticipates approximately 400 employees that may be retrenched as a result,” reads the letter.

There are approximately 1 037 permanent employees within the bank, some 651 of whom are in the personal banking, business banking and support divisions. In the past year 12 retrenchments have taken place.

“As a bank, we will conduct a people-centred process and will engage and fully support colleagues during a formal consultation period,” said Liebenberg.

Retrenched employees will receive counselling and financial advice through appropriate service providers.

Denker Capital executive director and portfolio manager Kokkie Kooyman said Covid-19 has accelerated consumer behaviour towards digital banking and it can be expected that more branches will close in the future, but international banks in the UK and SA have announced that they will not implement retrenchments until the Covid-19-induced lockdown is over.

Diminishing need for branches

“What we are expecting now, post-Covid-19, is for more banks to accelerate branch closures. However because Bidvest is really small, I suppose it doesn’t need branches that much, as most banks mostly use branches for deposits and even that has moved digitally,” Kooyman said.

He advises those working in the sector to upskill.

“I suggest that those working in the sector become technologically switched on and do as many courses in digitalisation as possible to make [themselves] irreplaceable,” Kooyman said.

He added that banks in Europe have already announced that they will close a third of their branches.

“We expect to see this throughout the world and in South Africa as well.”

AUTHOR PROFILE

COMMENTS   12

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Apparently the whole Bidvest group wants to retrench over 18000 people.

This is why we are in the so called eye of the hurricane.

Was there really a need for another bank though…. more banks will close more doors…

South Africa is a small market. There is no need for overcompetion… we need more and new products and services not more of what is already in the offering. There is no need to bring in another cell phone provider, for instance.

@Boombang. Agree. That is my fear….since we’re a small market, like you said…I think some local (smaller?) Asset Management and stock broking firms will merge / get gobbled up by the bigger ones. Fewer corporates left over.

SA has a modern banking system (which comes at a cost) and the public is likely over-serviced with available product options. And the market is getting too small for such elaborate choice of financial services.
(….but not only fin.services, every local industry will consolidate to a certain degree, be it in IT-tech, vehicles, retail space, …)

Competition is always good, especially if there’s large monopoly companies that dominate the space. How will new products and services be created without competition innovating against each other.

South Africa is full of monopoly companies that are dominating over everything, just look at MTN and Vodacom dominating. Or Multichoice dominating the paid for satellite TV space. Or the big 3 banks: FNB, Standard Bank and Absa. If it wasn’t for Capitec and the other smaller banks, those big 3 banks would still be stuck in the rut with offering only expensive banking options.

You want these big companies to change, but without proper competition and incentives to help new up and coming businesses, these big companies won’t have any reason to change their practices. Now, I’m not saying Bidvest isn’t a massive company, but the more competition there is, the more us customers can pick what suits us and assist new upcoming businesses; that aren’t greedy (yet) to only care about their shareholders and directors.

Or do you rather want these big monopolies to never fail and never give new businesses an opportunity to rise from the ashes. This is the main reason why millennial entrepreneurs are so doomed, because big companies cannot really fail anymore, so millennial small businesses struggle to get a foothold in the market, because of old large monopolies dominating the space. Not to mention all the international monopolies dominating over everything everywhere. That’s why we need to support local businesses, otherwise soon there will be nothing generating income for South Africans.

There is every need for competition. (Which we dont have). The difference between the repo rate and what your bank charges you is at least 3 %. ( Unheard of in 1 st world economies). Lack of competion is cited at the reason for this gap.

Bidvest Bank was formed in 1998, so hardly a new bank. In the business banking space, they are one of the few banks that really offer cheap banking solutions for new small businesses. So I hope they recover well.

Not to mention their normal banking solutions is the best cheap international travelling option, because ATM withdrawals is so cheap internationally on their bank cards. So they have a lot going for them. Also the excellent Old Mutual Money Account, uses a Bidvest bank account internally.

As for Bidvest group retrenching many many people, yes it shows how every facet of SA is going to feel the pressure, because the Bidvest group is very diverse in many different sectors. So this means the storm is hitting all sectors of the country. It is going to a tough ride.

What are you defending exactly?
I am battling to get the point…

Excellent Old Mutual money Account- come again?.
please explain the excellence compared to real banks.

The Old Mutual Money Account costs R4.95 a month, so it competes against the other cheap bank accounts, but you get a free Old Mutual Money Market Fund as a saving account with it, that has had 5-6%+ interest payouts the last few months, compared to Capitec’s now 2.25% interest, which makes a massive difference.

You also get cheap international atm withdrawals, seeing that it is basically a Bidvest Bank account with an OM fund as a savings account component. I closed my Capitec account and I’m keeping my OM Money Account. The OM Money Account app is also simple to use, I haven’t tested Capitec’s new app, but the old one was cumbersome to use.

and thats why they have to retrench…too cheap

Too many banks in sa

Did Bidvest have an extraordinary exposure to a specific economic sector?

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: