National Bank of Kenya (NBK) #ticker:NBK retrenched 112 employees who took up a voluntary early retirement offer last year in an exercise that cost the lender Sh541.2 million.
The Nairobi Securities Exchange-listed firm is among a group of publicly-traded companies that spent hundreds of millions of shillings to reduce their workforce in the year ended December 2018.
“During the year, the group implemented a voluntary early retirement scheme incurring a one-off restructuring cost of Sh541.2 million. A total of 112 employees participated in the voluntary early retirement scheme,” NBK says in its latest annual report.
The retrenchments implemented last year affected management ranks the most, with their number dropping to 721 from 791 in 2017. The number of clerical workers also declined to 432 from 494 while contract employees shrank to 203 from 214.
NBK’s overall workforce dropped by 143 to close the year at 1,356.
The lender added that the restructuring exercise was meant to boost efficiency and productivity going forward.
The bank, which has had one of the highest expenses in the industry, saw its cost-to-income rise to 74 per cent in the review period from 67 per cent the year before.
NBK is expected to undergo further restructuring once its proposed acquisition by KCB Group is completed. KCB says it expects NBK to run independently for about two years, after which it will be fully merged into the country’s biggest bank.
KCB #ticker:KCB and NBK have branches close to each other in multiple locations and this is one of the reviews of operations to be done as the institutions merge.
Increased retrenchment in corporate Kenya in recent times has been driven by a mix of automation and a tough business environment featuring heightened competition and tighter credit markets.
Other companies that implemented similar schemes include Britam Holdings, Barclays Bank of Kenya and Standard Chartered Bank (Kenya).
Britam spent Sh664 million to lay off 110 staff last year while a similar move at StanChart saw the exit of 54 employees that cost the lender Sh611 million.
Barclays also spent Sh479 million to let go of 78 employees.