Barclays sheds 50 jobs in second round of lay offs

Barclays Bank of Kenya has shed another 50 jobs to cut costs and reduce its wage bill as lenders increasingly spend less this year to maintain profit growth.

The bank on Monday said it laid off the contract workers at the end of December and indicated that it would deepen its costs cutting plans this year.

It retrenched 200 managers in December 2010, which helped it to save Sh1 billion in the nine months to September in a period when its income remained flat.

“Barclays has consistently reported the bank’s efforts to increase efficiency and contain operational costs,” Ms Nuru Mugambi, the bank’s head of corporate affairs said in a statement released on Monday.

“We continue to review our operations as we aim to realise our cost-to-income expectations amidst the tough operating environment we are witnessing both locally and in the global markets.” 

Other top banks including Equity and Co-operative have gone slow on hiring plans and job cuts while some such as Kenya Commercial Bank are in the middle of a reorganisation that has seen it cut its executive suite and announce a voluntary retirement plan.

The employment redundancies are informed by the efficiency gains that Kenyan banks have made after installing new information technology (IT) platforms in the past two years and merging some departments.

Sources at the Barclays Bank told the Business Daily that the lender is not done yet with the retrenchment plan in an effort to tame its wage bill, which is the highest in the industry, driven mainly by higher salaries paid to its workers relative to other banks.

Barclays Bank appears to have been hit hard by the redundancies since it pays its staff better than its peers and has always had the highest count of managers in the industry.

This is captured by the variance of its wage bill compared to that of Equity Bank despite having almost an equal number of employees.

Equity bank had 5, 563 employees in 2010 compared to Barclays Bank’s 5, 039, but it’s wage bill of Sh5.2 billion was lower than that of Barclays Sh8.3 billion.

This saw its staff cost account for 60 per cent of its operation cost in 2010 compared to Equity’s 47 per cent and KCB’s 52 per cent, according to research by Standard Investment Bank (SIB).

“Barclays Bank being a multinational lender has been paying relatively higher salaries and this has weighed down on its operations,” said Francis Mwangi, a financial analyst at SIB.

Its wage bill stood at Sh5.4 billion in nine months to September 2011 down from Sh6.4 billion in the same period in 2010.

The lower wage bill was attributed to the December 2010 retrenchment, which along with a Sh580 million drop in loan loss provision helped the bank report a 12.9 per cent rise in profit to Sh6.1 billion in quarter three.