Absa Bank reduced the total number of Absa Group employees by 1 200 in the first nine months of this year, as a result of the economic ramifications of the COVID-19 crisis, combined with its digital strategy implementation.
In its latest trading update, the big four bank says the COVID-19 pandemic has had a devastating impact on the global economy and has resulted in significant changes to government actions, economic and market drivers, as well as consumer behaviour. This has, in turn, had a significant impact on the bank’s performance.
The economic upheaval caused by the COVID-19 crisis, combined with the group’s digital transformation strategy, resulted in the bank reducing its headcount to 38 472 in 2020 – down from 41 703 in 2017.
Absa Group, which operates in 14 countries across the globe, has been intensifying its digital roadmap, with a key pillar in its strategy premised on developing scalable solutions and services that meet the evolving needs of customers.
An Absa spokesperson told ITWeb that while the total reduced headcount includes permanent and temporary employees across all 14 regions of operation, the bank has not instituted group-wide retrenchments.
“Much of the reduction stems from natural attrition as Absa instituted a hiring freeze – we did not fill positions that became vacant earlier, as part of our response to the business impact of COVID-19. Employee numbers are also impacted by the continuing global and local progression towards digital banking, which has been a trend over many years,” says the spokesperson.
In its retail banking report for SA, Absa says headline earnings dropped 91% to R415 million, due to 259% higher credit impairments as pre-provision profit increased by 10%. The bank’s revenue was flat at R24 276 million, as net interest income grew 6% and non-interest income decreased by 7%.
Absa says while it is not planning to close any branches in SA as part of its digital strategy, in other Absa regional operations business units (operations outside of SA) “customer needs are constantly changing and Absa has been investing in physical and digital distribution channels to offer more convenience”.
Industry-wide trend
The COVID-19 crisis and the associated protracted lockdowns resulted in the financial services sector taking a huge punch, amid job losses and a decrease in consumer buying power − resulting in banks introducing measures to lower costs.
In October, African Bank announced it would retrench a tenth of its employees (317), as it commenced a consultation process with its recognised finance union, Sasbo.
The financial services company also noted the restructuring would see it largely focus on digital offerings.
“The bank has furthermore been gradually automating processes across our operations and has implemented the omnichannel digital platform to reduce duplication and increase efficiency. Consequently, this has led to redundancies and has required the bank to evaluate its current resource capacity which may necessitate reducing duplication of functions,” said African Bank.
Even before the COVID-19 crisis, local financial services companies had been cutting down staff over the past few years, as they ramped up their digital transformation initiatives amid SA’s stagnant economy.
In early 2019, Africa’s biggest lender by assets, Standard Bank, announced plans to reconfigure its branch infrastructure, which resulted in 1 200 people losing their jobs.
The bank closed 104 branches; 49 in Gauteng, with a further 11 and 10 in the Western Cape and KwaZulu-Natal, respectively.
After last year’s retrenchments, Standard Bank told ITWeb the financial services sector is rapidly evolving and it remains firmly focused on offering more of the services and solutions required by clients and there are no planned job cuts.
“Currently, we do not anticipate the need for retrenchments as a direct response to the pandemic. As a responsible business, we will continue to evolve and adapt to changing external forces and customer preferences,” says Standard Bank.
In August 2019, Nedbank said in its interim report that it had been in consultations with the unions, adding that 1 400 staff members will be accommodated in a new business area, as the bank restricted its operations.
In an e-mail interview with ITWeb, Nedbank says: “Nedbank’s digitisation journey continues as we reposition ourselves to better respond to the evolving needs of our clients. To the extent that any staff roles may be impacted, we will continue to prioritise all alternatives to redeploy our staff. As always, retrenchment at Nedbank is an option of last resort.”
First National Bank (FNB) says while the COVID-19 downturn has had a significant impact on the economy, the current environment provides an opportunity for companies and workforces to create new ways of working.
“Our external recruitment continues to focus on highly sought-after skill sets that are in demand in the new world of work, in areas such as IT and digital development,” says Shamala Moodley, FNB HR executive.
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