KCB eyes Sh2bn savings in latest job cut move
Kenya’s biggest bank by assets, the KCB group has announced a fresh round of job cuts in a move aimed at saving costs at a time the banking sector is undergoing rapid changes.
Through a voluntary retirement program, KCB plans to let go of an unspecified number of employees as part of the bank’s transformation strategy.
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KCB Group chief executive officer Joshua Oigara in memo to staff members said changes in the banking landscape has seen the bank focus more on technology and innovation to reach customers, necessitating the need to cut down on employee numbers.
“The business landscape dictates that the future belongs to leveraging automation, digitization, Fintech, partnerships and collaboration to sustain growth and enable customers to go ahead. Therefore a mindset shift is essential to be able to be agile in adopting and embracing current business models as well as promote efficiencies in the current operating environment,” Mr Oigara said in his memo.
The exercise is expected to save KCB an estimated Sh2 billion a year in salaries that will be ploughed back into the business.
KCB has an estimated 7,200 employees spread across its regional operations.
KCB has operations in South Sudan, Uganda, Tanzania, Rwanda and Burundi.
Earlier in the year, the bank announced plans to lay off employees from its Rwanda subsidiary.
Banks have over the last six months been shifting focus to technology to meet customer needs amidst introduction of an interest capping law that is set to lead to reduced earnings for banks.
In the full year to December 2016, KCB posted a net profit of Sh19.7 billion which was flat compared to the Sh19.6 billion posted a year earlier.
During the period, KCB’s Operating expenses increased 11.9 percent to Sh40.3 billion.
In the voluntary early retirement plan approved by the board, employees who take up the offer will get one and half months basic salary for every year worked at the bank, four months gross salary in lieu of notice as well as have outstanding leave days paid off.
Affected employees will also get to keep their medical covers until their expiry.
KCB will pay 25 percent of all outstanding loans taken by employees who will then enjoy the bank’s staff rate for loans for a further six months.
Employees will have a month to apply for the voluntary early retirement offer with KCB expecting to conclude the exercise by June 15.