advertisement
Companies

Bank of Africa branch closures shine light on fragile industry

Bank of Africa has been in Kenya since 2004. PHOTO | FILE
Bank of Africa has been in Kenya since 2004. PHOTO | FILE 

The announcement of 12 branch closures by Bank of Africa Group has once again cast a spotlight on the fate of bank employees in the wake of last year’s interest rate cap that dimmed the industry’s outlook.

Bank of Africa in a Friday announcement attributed the closure of nearly 30 per cent of its branches located in various parts of the country to the ongoing digitisation of its banking services.

The bank did not disclose how many of its current 520 staff will be affected but admitted that some employees will be declared redundant as soon as the plan awaiting regulatory approval is implemented.

“We cannot tell exactly how many will be affected as at now and we can only determine that later. Some staff redundancies are expected though,” BOA Managing Director Ronald Marambii told journalists on Friday.

The bank will now operate only 30 branches out of the current 42. Bank of Africa has been in the country since 2004.

advertisement

Staff working in Nairobi where the bank has had the biggest footprint are likely to be most affected as the city will shed eight branches in the closures to remain with 17 outlets. An internal memo sent to the lender’s staff on Friday also attributed the closures to lower physical visits by customers to the branches.

“In the process, some staff redundancies will inevitably occur,” read the memo. BOA now joins a list of other local lenders who have engaged in massive staff reductions as effects of the recent capping of interest rates continues to shake the banking industry.

Sharia-compliant lender First Community Bank (FCB) recently announced laying off a third of its workforce. The lender, which has just more than 300 employees, has issued 106 of them with redundancy letters as part of cost-cutting measures.

Sidian Bank last year completed the laying-off of approximately 108 employees, which has cost the company slightly more than the Sh70 million originally planned. Family Bank has also announced that it plans to lay off an unspecified number of staff.

Ecobank is planning to retrench an undisclosed number of employees following a recent decision to close nine out of its 29 outlets in Kenya.

Standard Chartered, Kenya’s fourth-largest bank by assets, is expected to render 300 employees redundant following the decision to outsource the company’s non-core functions to India.

Equity Bank last year termed the departure of 400 employees who left in the nine months to September as “natural attrition” and not sackings.

This new season of job losses comes after lenders such as Co-op Bank, National Bank, KCB, and Barclays shed more than 1,000 jobs in five years under “restructuring programmes.”

BOA’s operating expenses stood at Sh2.3 billion as per the financial statements for the period to September 30, 2016.

advertisement