Co-op Bank plays down job cut fears in McKinsey plan
What you need to know:
McKinsey, informally called the global Mr Fix It firm for companies and governments, is almost synonymous with job cuts whenever it undertakes corporate restructuring contracts.
Co-operative Bank has downplayed fears of job cuts that are associated with organisational restructuring such as the one set to be undertaken at the lender by global consultant McKinsey & Co.
The bank has hired McKinsey to “restructure operations and enhance operational efficiency,” hinting at cost cutting measures that have resulted in job losses at Barclays, KCB and National Bank. Co-op Bank, however, says that it has doubled its branch network in the past three years without recording a significant surge in staff numbers, which should minimise staff cuts even as it targets to reduce its cost-to-income ratio (CIR) by nine percentage points by end of this year.
“We can’t comment on this since the review process hasn’t even began. Our strategy on staff rationalisation entails re-deploying staff to areas of growth notably branches, which coupled with reduced hiring, has kept our staff numbers at very controlled levels,” said the lender in an interview yesterday.
McKinsey, informally called the global Mr Fix It firm for companies and governments, is almost synonymous with job cuts whenever it undertakes corporate restructuring contracts. Last year National Bank hired McKinsey to advise it on reforming the lender’s executive suite which led to the scrapping of two positions of deputy CEO, a freeze on recruitment and laying off 200 employees through a voluntary early retirement scheme.
KCB in 2011 also hired McKinsey to spearhead a restructuring plan that resulted in the scrapping of about 15 director positions as the lender sought to cut reporting layers and increase efficiency. KCB Group shed 120 jobs at a cost of Sh1.2 billion in a three-year restructuring plan, aimed at trimming its wage bill, which closed last year.
Barclays Bank of Kenya has in the last three years trimmed its workforce by nearly 420 at a cost of Sh1.7 billion to reduce its cost-to- income ratio which was one of the highest among top-tier banks. McKinsey advised Barclays to shed 170 jobs at a cost of Sh788 million last year, ending the restricting.
The company opened its regional hub in Nairobi last month.
Co-op Bank said in a statement it had appointed McKinsey to undertake a three-month growth and efficiency review, which will inform the lender’s next five-year corporate strategic plan for the period 2015 to 2019.
“The review... is expected to enhance the bank’s growth momentum improving the group’s organisation structure, operating models and enhancing operational efficiency to deepen customer experience,” said Gideon Muriuki, Co-op Bank group MD.
Co-op’s cost-to-income ratio was recorded at 62 per cent in the year to December 2013, the highest among Kenya’s listed banks, and the review is meant to contain this ratio by slashing operating expenses.
