A KCB banking hall. The bank cut pay for senior staff from Sh374 million in 2011 to Sh216 million last year. FILE
What you need to know:
The past year saw banks let go senior staff to reduce reporting levels and trim wage bill.
Management pay by top banks dropped last year as the lenders deepened the cut on their upper ranks to trim payrolls and reduce reporting layers.
Details in the lenders’ annual reports show that KCB’s pay for senior staff fell to Sh216 million last year from Sh374 million the year before while that of Standard Chartered Bank fell from Sh320 million to Sh288. Barclays Bank cut management pay to Sh328 million from Sh343 million.
Equity Bank was the only top lender that had an increase in senior staff pay to Sh275 million from Sh197 million in 2011.
The banks, led by KCB and Barclays, last year laid off top and middle level staff after an aggressive hiring phase started in 2007 in the race for market share.
The Central Bank of Kenya is yet to release latest staff numbers for the banking sector, but last year it said management staff numbers dropped 5.5 per cent in 2011 to 7,021 as banks increased total staff to 30,056 from 28,846 in 2010.
“The decline in managerial staff may be attributed to cost-cutting initiatives as banks try to manage their expanding wage bill,” said CBK.
Cutbacks in numbers at managerial levels mark a significant shift in Kenya’s banking industry, which has in the past tended to focus retrenchment on low cadre employees.
But the lenders have in the past five years moved to strengthen their executive suites as talent emerged as key in increasing market share and profits. Competition for key talent has seen senior bank managers’ pay rise faster than those of the rank and file employees.
The sector is, however, likely to be faced with a reduction in hiring following introduction of electronic banking over the past three years.
Electronic banking products have increased the efficiency of transactions and significantly reduced the number of people visiting banking halls. This has reduced the supply of new jobs, which is set to slow down further with increased use of the agency banking model and mobile financial services anchored on partnerships between the lenders and telecommunication operators.
The Central Bank says banks in 2012 on average needed one employee to serve 474 account holders compared to 190 clients in 2007.
