By Londiwe Buthelezi for News24
One of South Africa’s new banking challengers, African Bank has joined a long list of companies who have to let go of their staff because of Covid-19.
African Bank announced on Tuesday that it has started retrenchment consultation processes with the banking sector union, Sasbo. The bank anticipated that the Section 189A consultations will affect 1 269 of its 3 728 employees.
The bank said it anticipates a job loss ratio of approximately 25% of those number affected meaning that ultimately around 317 people or 8% of its staff members may be out of jobs at the end of these consultations.
“The Covid-19 outbreak and the associated protracted lockdown intensified the dire state of the economy. Given the financial pressure faced by our customers the bank has recorded a reduction in sales as well as collections, which has created excess capacity across the different business units,” wrote the bank in a statement on Tuesday afternoon.
The bank had just entered the transactional banking space in 2019, trying to diversify its revenue streams beyond investments and loans that it was traditionally known for.
But the state of its lending book took the limelight away from the new venture in this year’s interim results when the bank announced that it had already experienced a 25% reduction in debt collections.
But on Tuesday, African Bank said the automation of its businesses processes also played a role in considering retrenchments. The gradual automating of certain tasks and customers increased usage of digital by customers had led to staff redundancies. In 2019, African Bank CEO, Basani Maluleke said the bank was training an army of 29 data analysts who would join the bank earlier this year and help it accelerate its digital banking game.
But African Bank was still adamant that there will always be a space to grow brick-and-mortar branches as it opened a new branch in Sandton City at the time.
However, on Tuesday, African Bank said the Covid-19 impact and the redundancies created by digitisation have made it imperative to restructure its operations and hence enter into consultations which may lead to the loss of jobs.
“We have been deliberate in reducing costs in all areas of our business. The undertaking of a consultation process with our employees is the last resort to further reduce costs. Our intention throughout the process will be to consider appropriate measures to avoid and minimise potential job terminations,” said Maluleke in the statement.
She added that the bank’s services to customers will not be affected by the retrenchments.