Feb 2, 2013

Vietnam - Staff cuts looming at banks

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VietNamNet Bridge – Vietnam’s restructuring banking industry is moving ahead with plans to cut staff after initially announcing plans to cut salaries and bonuses for their staff in the 2013 Lunar New Year.

An employee at the marketing department of a Hanoi-based bank said the bank’s marketing department in the south was ready to be dissolved though there is yet an official announcement.

A senior executive of the bank told VIR that its profit plunged considerably last year. For this year, the bank has forecast various difficulties, thus it is making plans to consider cutting personnel in the coming months.

At another bank, a staff member said the lender’s management decision was for those employees whose spouses also work at the bank—that one of the two has to quit their working.

Cutting salaries and bonuses, and even shrinking the labour force to cut costs, is no longer a big surprise at commercial banks in Vietnam. However, an executive of a bank said in 2013, this move would take place more often as the domestic banking sector still faces many difficulties.

Some of the problems are increasing bad debts - an obstacles against credit growth.

A deputy CEO of a major commercial bank in Ho Chi Minh City said when facing difficulties, lenders often thought of staff cuts because reducing salaries and bonuses were inadequate.

“When salaries and bonuses are cut down, the staff will not have enough inspiration to work. But staff cuts will make the survivors strive more to avoid being fired,” said the executive.

Oriental Commercial Bank chairman Trinh Van Tuan said his bank was also facing difficulties but had no staff cut plans. However, the salaries and bonuses for the 2013 Lunar New Year, he said, would not be as high as expected. The reason is the lender’s 2012 business results were not as good as expected, with profits lower because the cost of credit backups was increasing in line with increasing bad debts.

Another reason for personnel cuts is Vietnam’s banking restructuring process, in which some banks are being taken over by others.

Meanwhile, Ho Chi Minh City-based ACB faced another problem. ACB deputy CEO Nguyen Thanh Toai said his bank had to terminate labour contracts with employees on probation. ACB has trained them for more than one year to serve its 2013 network expansion plans. However, after a long time of waiting, ACB could not get a nod from the State Bank to make the expansions.

“We really don’t want such termination of the labour contracts because our bank also had some suffering such as costs to train them and salaries for them,” he said.

ACB had plans to increase its number of branches nationwide to 350 by the end of 2012 from 334 branches. However, the State Bank discouraged ACB to set up new units amid difficulties.

Late 2012, some SeaBank staff publicised anonymous letters saying that the lender was shrinking its labour force. However, the bank’s management refuted the information and said it still had plans to recruit more than 700 employees.

Source: VIR

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