Carnage in the banking sector
LIVINGSTONE MARUFU
Local banks are eliminating jobs following a prolonged market turbulence, increased automation in the financial services sector as well as the adverse impact of the Covid-19 menace, Business Times can report.
The lenders are also battling rising impairments, leading to muted headline earnings, a situation which has given headaches to bank executives.
A closer analysis at local banks’ recent financial results shows the lenders have also suffered receding volumes and low profits. Earnings have shrunk significantly across the sector.
Consequently, several lenders are trimming staff as they respond to realities of a myriad of challenges.
Steward Bank is the latest lender that announced that it is shedding employees across its operations, starting from this month following automation and deployment of a new core banking system. The lender said the retrenchments were also necessitated by its continued investments in the digital transformation journey.
Zimbabwe Banks and Allied Workers Union secretary general Peter Mutasa told Business Times that lenders were putting more employees on the chopping block and expects the carnage to continue this year as the volatile environment and Covid-19 will drive many banking sector workers out of employment.
“For as long as the economy is performing badly, we are likely to see more banks retrenching workers. Our situation is based on two main factors which are digitalisation and poor economic performance. It appears there will be continued automation of banking processes and this will cause more banks to retrench. If the economy was performing well, more economic activities would mitigate the job losses through added demand for bank products and services,” Mutasa said.
The situation has been worsened by the bulk of building societies failing to meet the minimum requirements with some merging with sister commercial banking units.
In his Monetary Policy Statement on Monday, Reserve Bank of Zimbabwe governor John Mangudya said merger proposals would also address the minimum capital requirements for some building societies.
Experts say automation has taken over in the financial sector, giving banks a leeway to remain with a learner workforce.
Commenting on the Steward Bank rationalisation exercise, Mutasa said: “The bank has been evasive with information and has not been following proper procedures. We are therefore still collecting information but currently around 40 workers have indicated that they are affected. We will be engaging the bank this week and verify the actual numbers.”
Mutasa said the government must be concerned about the job losses and the other negative outcomes of unregulated automation drive.
“This should be discussed at the Tripartite Negotiations Forum and we agree on a fair transition and how the effects of digitisation can be mitigated. At sector level we cannot do much because there is no supporting legislation or policy framework,” he said, adding the that the current labour laws are colonial in nature and disempowers the workers and unions.
