JOHANNESBURG - The African Bank said on Friday that it has concluded a section 189A consultation process to lay off about a sixth of its nearly 4,100 staff complement through the settlement of voluntary severance and retirement packages.
Earlier this year, African Bank proposed cutting 650 jobs following a decline in loan volumes in a bid to reach a sustainable cost base needed for its long-term strategy, including expanding to retail banking.
But the bank last month decided to discontinue the Section 189A consultation process because of the response it had received to its offer of voluntary severance and retirement packages, which were enough to stave off planned retrenchments. The mediation consultation entailed offering voluntary severance and retirement packages to staff.
Click here to read: African Bank staff snub retrenchments
The bank then reached the agreement with the South African Society of Bank Officials (Sasbo), the union that is representing workers who were to be retrenched, to have workers take voluntary severance and retirement packages.
Since the commencement of the Section 189A process in April 2017, the bank's staff complement has been reduced by 636 full-time employees.
This was as a result of 515 applications approved under the voluntary agreements offer and normal staff turnover giving rise to a further 121 reduction of the staff complement over the same four-month time period.
African Bank chief executive, Brian Riley, said it had been a difficult few months within the bank and they were relieved to have completed this consultation through a voluntary process.
"The bank expects to save approximately R50 million per annum as a result of the Voluntary Agreements. A once-off cost of approximately R60 million to settle the voluntary packages will be incurred and expensed in the annual financial statements for the year ended 30 September 2017," Riley said.
"The bank remains confident that the strategy, as articulated previously, remains relevant, achievable and continues to gain traction. The successful conclusion of this collaborative exercise has contributed significantly to a more sustainable cost base for the business going forward."