NCBA to fire staff as post-merger ship wobbles

Kenya’s third largest bank by asset base NCBA is set to fire staff as a response to constrained operation barely one year on from its CBA, NIC consolidation birth.

In a memo to staff, NCBA Group Managing Director John Gachora says the redundancies has been forced upon by the tough and uncertain operating environment reversing the lender’s earlier promise to retain its entire staff compliment.

“The COVID-19 pandemic, which is the most harrowing health and economic crisis of our lifetime, has affected the execution of our growth plans. We have had to defer our plans to scale our branch network and have taken unprecedented steps to support our customers in weathering this storm through loan moratoriums and fee waivers,” he said.

“Our expectation is that recovery will be slow; there are businesses that may never re-open and many of our customers will require support for a longer period to come.”

The workforce restructure will follow a two pronged process beginning with a first phase Voluntary Exit Program (VEP) whose application runs to November 16.

Employees signing up on the exit program will receive benefits including salaries to the last day of work, latest December 31, an exit payment calculated at the rate of one month’s salary for each year of service and compensation for unutilized leave days.

Additionally, the employees will receive a 10 per cent discount on outstanding loans if settled within six months of exiting while the outstanding loans will accumulate interest at a discounted staff rate for up to one year.

NCBA is later expected to roll out a redundancy program whose terms and conditions will be dependent on the outcomes of the VEP and affected staff will be released from employment on or before December 31, 2020.

John Gachora has indicated he will host a townhall meeting on Wednesday November 4 with all staff to walk them through the expected changes.

NCBA’s boat has continued to rock in recent months as the bank runs into post-merger headwinds, worsened by the emergence of the COVID-19 pandemic.

In June this year, the lender shut 14 branches in what it termed as a post-merger consolidation exercise which would later see it deploy a surgical expansion plan by opening new branches in new locations.

This is as NCBA reviewed its branch count closing branches in close proximity to each other.

Last month, the lender run into a new headache as it was hit by a system glitch in the consolidation of its branch systems leaving millions of customers without banking services.

The bank’s financials have however remained solid boosted in part by the merger exercise. NCBA reported an 8.3 per cent profit after tax growth to Ksh.2.6 billion in the half year period to June 30.

Earlier in the year, the bank pulled a Ksh.1.50 a share cash pay-out to shareholders sighting the need to adopt to a cash preservation stance based on the prevailing uncertainities on the banking sector to instead recommend a bonus share issue.