According to Sasbo, the First Rand subsidiary also plans to shut down 10% of the bank’s branches, translating to a total of 40 branches, while it plans to reduce staff numbers in 31 other branches, Bloomberg reports.
Sasbo spokesperson Vanessa Hattingh said over 500 employees based at the Johannesburg office may be permitted to apply for other roles within the bank.
Retrenchment processes, which began in February, are being instituted to boost efficiency and reduce duplication of services as a growing number of consumers are choosing to use online services to transact, via computers, tablets and mobile phones.
“Unfortunately, the use of biometrics and electronic channels can mean job losses. For the banking industry, the broader economic issues are real. Retrenchments aren’t good for the people or the country,” Hattingh said.
Responding to questions, FNB said that full service branches wouldn’t be affected and that the bank was still expanding its network of ATMs.
“If a bank can’t grow its revenues at a decent level it needs to look at getting cost efficiencies. The banks will try to reduce costs through natural attrition of employees and using smaller, new format branches that have lower rental costs. The operating environment and therefore revenue growth, has become very challenging,” PSG Wealth bank analyst Adrian Cloete was quoted saying in the report.
Despite First Rand’s recent announcement that it would pull back on lending, industry analysts say news of the retrenchments comes as a shock.
“No one ever thought that FNB would have to resort to these measures,” said Thebe Stockbroking trader Bruno van Eck.
No other local bank is said to be considering retrenchment processes at this time, but the situation could very well change as the demand for physical branches begins to fizzle.