African Bank has begun consultations under Section 189A of the Labour Relations Act, a move that could result in the loss of up to 1 200 jobs and the closure of 90 branches as the lender seeks to cut costs and improve operational efficiency.
The bank confirmed on Thursday that it had reached the contemplation stage of the retrenchment process and had engaged with the South African Society of Bank Officials (SASBO), the union representing many of its employees.
The decision follows the bank’s interim financial results presentation on June 25, where it outlined a refined strategy focused on operational consolidation and cost optimisation.
‘Costs exceed risk-adjusted revenue’
African Bank said its costs currently exceed its risk-adjusted revenue, prompting management to intensify efforts to reduce expenses across the business. Measures already under review include information technology spending, procurement costs, lease agreements and other operational expenses.
Despite exploring a range of cost-saving initiatives, the bank said it had reached a point where employee-related costs also needed to be reviewed.
“The action has not been taken lightly and is a direct result of our current business realities,” the bank said in a statement.
Interim group CEO Zweli Manyathi acknowledged the impact the process could have on employees but insisted it was necessary to secure the bank’s long-term future.
“We understand that this is a difficult period for the business and our people. However, it is necessary for the future sustainability of the business,” said Manyathi.
‘Future sustainability at stake’
The proposed restructuring could affect employees across various business functions and may result in the closure of 90 branches nationwide.
African Bank said it would continue working with SASBO throughout the consultation process and would consider feedback from the union before deciding on the way forward.
The bank moved to reassure customers, investors and other stakeholders that it remains financially stable, saying it is capitalised above minimum regulatory requirements and has sufficient liquidity to meet its obligations.
Management also pledged to support employees who may be affected by the process through a structured programme and assistance from its wellness partner.
“We will ensure that we are transparent and treat each employee with dignity and respect, in line with the values of our organisation,” the bank said.
The consultation process is expected to continue in the coming weeks as the bank and labour representatives engage on possible alternatives and measures to mitigate the impact on workers.
- African Bank has initiated consultations under Section 189A of the Labour Relations Act, potentially leading to up to 1,200 job losses and the closure of 90 branches to cut costs and improve efficiency.
- The retrenchment process began after the bank's June 25 interim results highlighted the need for operational consolidation and cost optimization due to costs exceeding risk-adjusted revenue.
- The bank is reviewing various cost-saving measures including IT spending, procurement, leases, and employee-related expenses as part of its strategy.
- Interim CEO Zweli Manyathi emphasized the necessity of the action for the bank's long-term sustainability while committing to a respectful, transparent process with employee and union engagement.
- African Bank reassured stakeholders of its financial stability, above regulatory capital requirements, and pledged support and wellness assistance for affected employees during consultations.
African
African
Despite exploring a range of cost-saving initiatives, the bank said it had reached a point where employee-related costs also needed to be reviewed.
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Interim group CEO Zweli
"We understand that this is a difficult period for the business and our people. However, it is necessary for the future sustainability of the business," said
African
Management also pledged to support employees who may be affected by the process through a structured programme and assistance from its wellness partner.
"We will ensure that we are transparent and treat each employee with dignity and respect, in line with the values of our organisation," the bank said.
