OCBC Chief Pledges to Avoid Staff Cuts Despite Virus Impact
Singapore’s three largest banks have joined some global peers in pledging to avoid staff cuts due to the coronavirus pandemic.
“We do not plan to have retrenchment exercise arising from this outbreak,” Oversea-Chinese Banking Corp. Chief Executive Officer Samuel Tsien said in a recent memo to employees. His counterparts at DBS Group Holdings Ltd. and United Overseas Bank Ltd., Piyush Gupta and Wee Ee Cheong, issued similar statements on Wednesday saying they don’t envisage the need for cutbacks.
The three lenders employ more than 85,000 people in total across Asia and beyond.
Morgan Stanley and Citigroup Inc. are among the global banks that have pledged to preserve jobs despite the worst economic downturn in years, as the pandemic cripples tourism, manufacturing and services. The Singapore government has said the economy may contract by as much as 4% this year.
The Monetary Authority of Singapore, the nation’s financial regulator and central bank, is allocating S$125 million ($87 million) for banks and other financial firms to train staff and support fresh graduates during the downturn.
Read about the expected impact of the virus on Singapore bank earnings
Despite the expected hit to the bank’s revenue growth, Singapore-based OCBC has “strong levels of capital, funding and liquidity to guide us through these uncertain times,” Tsien wrote. An OCBC spokeswoman confirmed the contents of the memo, which was distributed to employees on March 24.
Gupta, in an emailed response to questions from Bloomberg News, also said his bank’s liquidity and capital position is strong. UOB’s Wee said his bank does not “plan to conduct retrenchment exercises at this point in time as a result of Covid-19.”
DBS, Southeast Asia’s largest lender by assets, employed 28,419 people as of the end of 2019. Its most recent major job cuts took place in the aftermath of the 2008 global financial crisis, when it trimmed 900 positions.
“They couldn’t dodge it in 2008, and with the economic impact expected to be greater, it would require that all stakeholders share in the pain,” said Justin Tang, head of Asian research at United First Partners in Singapore. “This would include a cut in dividends, non-paid leave and pay cuts all around.”
OCBC’s total headcount stood at 30,492 at the end of December, and the bank has operations across Southeast Asia, Greater China, Europe and the U.S. The number of staff has risen 41% in the past 10 years, according to data compiled by Bloomberg. UOB had total headcount of 26,872.
Shares of the three banks opened higher in Singapore trading Thursday. The stocks have tumbled this year as interest rates fall and the impending recession increases the risk of bad loans, with DBS sliding about 26%, UOB 23% and OCBC 18%.
©2020 Bloomberg L.P.