One of Kenya’s oldest banks has let go hundreds of employees as it struggles to stay afloat.
National Bank of Kenya (NBK) has retrenched 112 employees in an exercise that cost the lender Sh541.2 million and is meant to see the bank begins the long walk back to profitability by boosting efficiency and productivity going forward.
The Nairobi Securities Exchange-listed firm is among a group of publicly-traded companies such as Britam Holdings, Barclays Bank of Kenya and Standard Chartered Bank (Kenya), that spent hundreds of millions of shillings to reduce their workforce in the year ended December 2018.
“During the year, the group implemented a voluntary early retirement scheme incurring a one-off restructuring cost of Sh541.2 million. A total of 112 employees participated in the voluntary early retirement scheme,” NBK says in its latest annual report.
The retrenchments implemented last year affected management ranks the most, with their number dropping to 721 from 791 in 2017. The number of clerical workers also took a hit from 494 to 432 while contract employees declined from 214 to 203.
NBK’s overall workforce dropped by 143 to close the year at 1,356. The corporate scene in Kenya has in recent years experienced an increased number of retrenchments largely driven by a mix of automation and a tough business environment featuring heightened competition and tighter credit markets.
NBK’s retrenchments are just one of many painful pills the lender must swallow if it wishes to get out of the red. Central Bank of Kenya (CBK) Governor Patrick Njoroge warned last week that the lender faces imminent collapse if it is not taken over by Kenya Commercial Bank (KCB) Group in the proposed merger of the two lenders.
“NBK isn’t a small institution and letting it collapse will be disastrous to its over 650,000 customers and the financial sector at large,” Dr Njoroge told the Finance and National Planning Committee of the National Assembly.
KCB, Kenya’s biggest bank, has offered to take over the ailing institution through a share swap deal. KCB says it expects NBK to run independently for about two years, after which it will be fully merged into the country’s biggest bank.
On Friday last week, the High court declined to issue conservatory orders suspending the takeover of National Bank of Kenya (NBK) by the Kenya Commercial Bank (KCB). Petitioners Evans Aseto and John Kiptoo had moved to court to seek orders to suspend the looming merger arguing that there has been no public participation in the process.
However, Justice Weldon Korir instead certified the matter urgent and directed the petition challenging the acquisition of NBK by KCB group to be heard on 26th June this year.
KCB and NBK have branches close to each other in multiple locations across the country and this is one of the reviews of operations set to be done once the institutions merge.
NBK, which operates 82 branches countrywide, requires an injection of at least Sh13 billion ($130 million) to stay afloat and to be in compliance with statutory requirements.
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