National Bank of Kenya to send home employees beginning tomorrow

National Bank of Kenya (NBK) will send home 150 employees beginning tomorrow in a fresh round of restructuring aimed at keeping the struggling lender afloat.

The bank said in a statement the board had given the nod to institute a voluntary early retirement plan targeting some of its permanent and pensionable workers aged 35 years and above. Those willing to take up the offer must also have worked with the bank for at least five years.

The bank has been going through a rough patch, with its profit after tax having dropped to Sh138.1 million in the period to September last year compared to Sh521 million reported over a similar period last year.

The move to shed its workforce comes a month after another lender, Family Bank, also announced that it would sack 150 employees as profits in the banking sector continue to dwindle.

A number of factors, including a slowdown in the economy and a legislation that put a ceiling on interest rates, have contributed to the current state of affairs.

Wilfred Musau, the NBK chief executive, said the bank had too many employees who were not productive hence the need to “align the staff headcount with the strategic needs of the bank".

The lay-off by the listed bank is the second in four years. The last one was undertaken in 2014 and saw 200 employees shown the door.

Mr Musau said those who opted for early retirement would be legible for severance pay equivalent to one month’s salary for each completed year of service.

“However, for applicants aged 50 years and above, the severance pay will be at the rate of two month’s salary for each full year remaining to the retirement age of 60,” he said, adding that affected staff would continue to enjoy their medical insurance for the remainder of this year.

Win-win deal

“We believe the scheme is employee-friendly and is good for the bank too, thus a win-win deal for both parties,” said Musau.

According to the Kenya Bankers Association (KBA), its members cut 1,933 jobs between August 2016 and the end of June last year.

Banks had 28,009 staff as at August 2016, but the firing spree saw the sector’s workforce fall to 26,076 employees by June 2017. So far, at least 10 banks have shed part of their workforce.

The country’s biggest bank by asset, Kenya Commercial Bank, last year announced it would lay off some staff. Sources put the number at more than 500, including 28 workers in its Rwanda branches.

In June of the same year, Barclays Bank of Kenya announced that it would lay off 130 employees through a voluntary exit scheme.

First Community Bank, which does not even charge interest, also announced it would axe 106 staff. And early last year, Equity Bank, Kenya’s largest by customer base, let go of more than 400 workers.

Standard Chartered Bank followed closely, sending home more than 300 workers while Sidian Bank let go of 108. The NIC Bank sacked 32.

Several banks have also shut down branches and in the process released more staff.