Acting president of the Zimbabwe Banks and Allied Workers Union, Peter Mutasa, confirmed the retrenchments, adding that at least a third of the 6 000 bankers were likely to lose jobs in what he called a “premature” reaction by the employers.
Banks were forced to retrench owing to low liquidity levels as well as the need to realign business after the adoption of multiple currencies last year.
Mutasa said banks that retrenched staff in the past year include Metropolitan (120 employees), People’s Own Savings Bank (160), Standard Chartered (98, through voluntary retrenchment) Barclays and FBC (200 on voluntary retrenchment), Renaissance (5) and Tetrad (16). Interfin intends to axe 45 workers and the issue is still with the Retrenchment Board.
NMB also axed 75 non- managerial staff while CFX retrenched 61 non- managerial and 39 managerial staff. CBZ and Premier have also retrenched employees.
“It appears that all banks would be retrenching,” said Mutasa. “Banks are retrenching between a third and half of their staff. We feel that this is premature as the employers are misreading the political environment. We do not think they should retrench as this year is better than last year.”
He added that the retrenchment packages most workers were getting, between US$2 000 and US$3 000, were “very little” and could not sustain them six months after losing their jobs.
Mutasa said it was “fashionable” to retrench as was shown by Interfin and CFX which have axed workers before the conclusion of their merger.
If the country was to get more foreign direct investment, Mutasa added, then the banking sector would rebound and the employers may require the staff they retrenched.
The banking sector is faced with serious challenges brought about by the use of multiple currencies and the response has been to reduce staff and branches.
The IMF, in a commissioned report, identified a number of weaknesses in the financial sector, saying weak governance characterising operations at the Reserve Bank of Zimbabwe (RBZ) had a serious bearing in the short term on the banking sector.
RBZ’s problems also meant that banks would not be able to obtain a refund of their statutory reserves for which they are entitled in case of a possible decline in their deposits because these reserves are not backed by international reserves.
“Failure to refund statutory reserves, when required, may lead to loss of confidence in the banking system, resulting in possible bank runs and contagion with spreading liquidity problems,” said the multilateral institution in the report. “Bank runs may lead otherwise solvent banks to experience large losses, as they struggle to mobilise less liquid assets to meet liquidity needs. These losses could quickly erode the capital position of weakly capitalised banks.”
The report added that under the current situation, the central bank would not be able to return banks’ real time gross settlement funds as this account was backed by international reserves at mid-March 2010, but the backing could fall short as RBZ governance remains weak.
There is virtually nothing in terms of gross income at the central bank and despite talk of re-sizing, there is no plan on down-sizing the central bank to limit its operating expenses.
IMF said in the absence of a lender of last resort, banks were exposed to liquidity risk which may also lead to bank runs.
Even solvent banks may not survive a run on deposits as they would struggle to mobilise “less liquid assets to meet liquidity needs”.