Hundreds of Jobs at Risk as Absa Revamps Its South African Retail Bank
(Bloomberg) -- Absa Group Ltd. is restructuring its South African retail and business banking unit within months of reducing the division’s management team and rolling out a new strategy.
Finance labor union Sasbo was notified to begin consulting staff last week on the potential impact of the move, union representative Philip Landman said by phone Wednesday. About 15 retail-banking executives exited their positions at the Johannesburg-based lender in June, after a similar process was followed to flatten the unit’s top structure.
Discussions between Sasbo, Absa and employees are still in their early stages, with 827 jobs potentially at risk, Landman cited a written notice from the company as saying, adding that 340 people might be employed through the process. “At this point we are trying to figure out if what the bank is saying has merit, and prove that the restructuring is actually unnecessary.”
“It is only once the realignment is complete that the total number of people who have either been appointed to new roles or have left the organization will be known with certainty,” Absa said in emailed comments. The changes will result in “both new opportunities and redundancies across the business,” it said, adding that the steps aren’t a “retrenchment exercise, but a realignment effort aimed at enabling our new strategy.”
The shake-up comes as South African lenders contend with slow economic growth and a consumer base battered by tax hikes and rising fuel and utility expenses. A stubborn unemployment rate of about 27 percent and declining business confidence is also curbing demand for loans, forcing banks to bring their costs down.
Retail and business banking accounts for more than half of Absa’s profit and is at the center of a group-wide push to grow revenue faster than its competitors after the lender’s former U.K.-based parent, Barclays Plc, sold down its controlling stake to below 15 percent.
The division’s chief executive officer, Arrie Rautenbach, who was appointed about a year ago, is focusing on boosting mortgage lending, lowering costs and expanding the number of products sold to its clients. Rautenbach is implementing his strategy as South Africa’s banking sector becomes increasingly competitive with one new rival, TymeBank, launching in February and two more expected to follow this year.
The stock rose as much as 2.1 percent before paring gains to trade 0.4 percent up as of 9:16 a.m. in Johannesburg. After underperforming the FTSE/JSE Africa Banks Index in 2018, Absa has advanced almost 8 percent this year, leading it’s three biggest peers.
Absa will publish its annual financial results on Monday.
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