Family Bank sacks 150 as rate cap now bites 2083 bankers

Family Bank has laid off 150 employees sending the number of bankers out of work this year to 2083, the worst turnover in recent years.

The lender, which let go about 100 staff across its branches in December last year, through voluntary early retirement, attributed this to depressed economic performance in the first full year under the rate cap regime.

The bank said aligning costs to work within the depressed returns is something that is high in their agenda.

“We continue with various cost-cutting measures and in that respect, we have undertaken a restructuring programme to resize the support functions at the Head Office in order to achieve meaningful and sustainable revenue growth. Branch operations will not be affected by this exercise,” Family Bank Managing Director David Thuku told Weekend Business.

“As a bank, we have provided full support to the affected members of staff to ensure that they receive the necessary support in this difficult transition.”

Family Bank made a Sh743 million loss for the nine months to September, down from a Sh963.3 million net profit in a similar period last year. The lender, however, climbed back from its cash liquidity problems to boost its reserves by almost nine percentage points.

Since the introduction of the law capping lending rates at four percentage points above the 10 per cent Central Bank Rate and imposed a minimum deposit rate of 70 per cent of the benchmark rate, banks have been forced to retrench to manage costs.

According to the banking sector lobby Kenya Bankers Association (KBA) its members had cut 1,933 jobs between August 2016 and the end of June this year, attributing this to the adjustment to the reality of the rate cap.

Last year, banks had employed 28,009 staff as at August 2016 but the bloodletting left 26,076 employees by June 2017.

Family Bank joins a growing list of lenders that have announced layoffs and branch closures since the coming into force of new legislation capping interest rates.

At least 10 banks have already sacked employees in what has seen more than 2,000 people lose their banking jobs.

Voluntary retirement

The country’s biggest bank by asset Kenya Commercial Bank (KCB) early in the year announced it is laying off some staff. Sources put the number at more than 500 employees, with 28 workers at its Rwandan branches affected.

In June, Barclays Bank of Kenya announced that it was laying off 130 employees through a voluntary exit scheme.

First Community Bank, which does not even charge interest, also announced it was cutting down on 106 staff.

Earlier this year, Equity Bank, Kenya’s biggest bank by customer base, let go of more than 400 workers, Standard Chartered followed closely with more than 300 workers while Sidian Bank shed off 108 workers.

Last December, the National Bank of Kenya (NBK) announced plans to lay off staff and offer an incentive early voluntary retirement plan starting January this year. NIC Bank also sacked 32.

Banks have also shut down branches and in the process released more staff. Barclays Bank shut seven branches this year while Bank of Africa and Eco Bank, also closed 12 and 9 branches respectively.