Banks’ search for currency dealers sparks talent war

Banks are boosting their human capital in the foreign exchange business through aggressive hiring and firing, a move that has sparked a high staff turnover in a field where formal training is almost non-existent.

The high cost of training currency dealers has sent banks poaching employees using fat bonuses, running into millions of shillings.

“Getting somebody who has more than five years’ experience in the business in not easy hence banks have resorted to poaching, fuelling talent wars that have resulted in high staff turnover,” said Chris Muiga, a senior dealer with the Kenya Commercial Bank.

“This year alone has witnessed several senior dealers from Equity Bank, Co-operative Bank, KCB and other market players see off their personnel either to avoid risk or due to talent flight in search of better benefits,” said a currency dealer who sought anonymity.

Equity Bank’s forex income dipped from Sh161,211,000 to Sh40,236,000 in the first quarter this year, a situation that saw the bank take action to avoid an earlier precedent that saw the bank incur losses amounting to Sh23,385,000 during the same period last year, according to the quarterly financial results released by the bank.

Smaller banks which are unable to marshal enough resources have witnessed increased talent flight.

Most of the training is done by overseas companies. The Euro Money has trained a majority of staff currently working with the local banks.

Restricting bonuses

“The cost of training one dealer alone for one module that lasts for five days costs slightly above Sh300, 000 while it takes up to five modules to properly train a new staff, pushing the training cost to well above Sh1.5 million,” said Mr Peter Mutuku, a dealer with the Bank of Africa.

The banking fraternity has tried to cap increased staff turnover by restricting bonuses to employees who have stayed for over six months.

The end of every half year is therefore followed by an exodus to new pastures.

But the exit of employees is at times due to trading losses running into millions, forcing the bank to show them the door.

Dealers said the challenge associated with working for a big bank is that the risk is too high, given the high level of investment that top-tier banks like Barclays, Equity and KCB channel into the business.

Officials in major banks who sought anonymity said the financial institutions were paying their dealers a minimum of Sh200, 000 a month to retain them, with bonuses running into millions of shillings.

The forex market has grown to be a major revenue source for banks and the banking industry players are allocating significant resources in both financial and human capital to reap from the heavily capitalised sector.

Barclays Bank, which is one of the largest investors in the forex market, earned beyond one billion in forex trading only, according to the bank’s half year financial statement for 2010, reflecting the significance that banks have placed in the business.

Analytical skills

Currency dealers say the job requires highly analytical skills since they operate in a high pressure environment.

“The employees are entrusted with a lot of money hence the need for the best skills in the market,” said Mr Joshua Anene of the Commercial Bank of Africa.

“The dealer must be able to tolerate immense pressure ” said a dealer with the Commercial Bank of Africa.

The job, which requires high analytical skills and knowledge of global new trends, demands extra input of working hours to keep up with the constantly changing business environment.

Traders admit that it is becoming increasingly difficult to forecast business trends due to the increasing speed of change in business news and politics as the world grows more interconnected due to the internet.

This year registered a reduced foreign exchange trading per shilling across the industry due to what dealers and industry leaders attributed to minimal volatility.

However banks with high capital investment and well trained staff managed to increase their returns compared to last year’s.