Standard Bank Group Ltd, Africa’s largest lender which trades as Stanbic Bank in Zimbabwe, said it will cut 4% of its South African workforce and 13% of its London employees to prepare for a possible decline in full-year revenue.
“Revenues have been falling at an increasing rate,” Chief Executive Officer Jacko Maree told reporters in Johannesburg today, adding that the environment for banking in South Africa “remains very tough.” The outlook for revenue in the year through December is “flat, maybe down,” he said.
Standard Bank will make redundant 1,145 permanent South African jobs, including 65 executives, 670 managers and 410 general staff, and cut 600 contract jobs in the country, it said in a statement. In London, 160 permanent roles will be terminated, including 40 executives, 75 managers and 45 general staff, with another 110 contract jobs ended, it said.
Standard Bank’s cost-to-income ratio of 58,1% at the end of the first half compares with South African rivals Absa Group Ltd.’s 54%, Nedbank Group Ltd.’s 55% and FirstRand Ltd.’s 57% for the full year through June. Standard Bank’s staff costs increased 6 percent to 9,5 billion rand ($1,36 billion), accounting for more than half of operating expenses, in the first six months of the year.
Standard Bank will also scale back and delay some projects, especially in information technology, reduce marketing and sponsorship deals and has canceled conferences and year-end functions, it said. With hindsight, the company should’ve acted sooner, Maree said.
Managers make up 31% of Standard Bank’s workforce while global benchmarks indicate it should be closer to 20%, Deputy CEO Sim Tshabalala said. The company will complete consultations with its employees by next week, he said.
The lender’s private banking division in South Africa and London will be affected while the private equity unit in South Africa is being re-organised, Maree said. No other “general retrenchments” are planned, he said, adding that decisions on bonuses to executives will be made in February.
Standard Bank wants to focus on emerging nations after expanding in Russia, Argentina, Nigeria and other African markets faster than local competitors.
The company’s share price is the worst-performing of the five-member FTSE/JSE Africa Banks Index this year, rising less than 1 percent compared with an average increase of 6%.