DBS layoffs: Taken by surprise?

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A rather good article written by Conrad Raj aka Editor-At-Large.

SINGAPORE : For the second time in less than a decade DBS Holdings, the listed parent of DBS Bank and the island’s largest financial institution, has announced plans to reduce its staff strength - this time by more than 900 people, or 6 per cent of its total workforce.

The move appears to have taken most people, especially the staff, by surprise because, although the bank reported a sharp decline in earnings for the third quarter, it did not plunge into the red nor is it likely to do so in the final quarter.

Unlike the previous retrenchment exercise when some 200 staff were axed in Singapore in 2001, this time the cuts are across the board and affect personnel both in Singapore and Hong Kong.

In 2001 the bank’s broking arm, DBS Vickers Securities, also retrenched some 250 people following the integration of the operations of DBS Securities, Vickers Ballas and Lum Chang Securities.

And between 2001 and 2002, Mr Wee Cho Yaw’s United Overseas Bank let go 435 staff following its merger with Overseas Union Bank. After OCBC Bank absorbed KeppelTatLee Bank, it got rid of some 200 people.

So, while the previous layoffs were the result of integrating acquired institutions, this appears to be the first time DBS is involved in a mass layoff as a result of a global economic downturn.

Chief executive Richard Stanley told reporters at a briefing on its operating results: “To be a streamlined organisation, I believe we must run a tighter ship.”

The cuts are being made despite staff costs in Singapore and Hong Kong having fallen substantially from both the previous quarter and the corresponding period a year ago.

Could the lay-offs have been avoided? What other measures did the group look at before deciding to take the present drastic action?

The bank earned S$402 million in net profits for the quarter ended September 31: 38 per cent less than the corresponding 2007 quarter. And in the first nine months of the year net profits were off only 13 per cent to the S$1.67 billion from a year ago.

As UOB told TODAY about its manpower policies: “The bank (UOB) will continue to be disciplined in managing its cost. And in managing our expense, we will examine all avenues, including staff cost. In general, there are many avenues to manage staff cost. Some avenues could include, inter alia, smaller or no built-in increment, our performance linked bonuses, re-deployment of staff, through attrition etc. Job cuts are considered only as a last resort.”

Were the above measures considered by DBS Bank’s management? Or were they more concerned in increasing the bottomline and maintaining profit margins than in protecting jobs?

And who are the ones that are going to be laid off at DBS? Are they going to be the so-called non-performers, the underperformers, or those that led DBS into its unfortunate encounter with the Lehman Brothers Mini-Bonds and the DBS High Notes 2 and 5?

Those at the receiving end will feel unfairly treated if those responsible for the S$70 million that DBS has to put aside to meet its structured notes obligations and the ensuing adverse publicity are retained, while they are given the pink slips.

DBS will not be the last company to retrench staff here. The current global downturn, which has been exacerbated by a credit crunch. Many may even drown under the “financial tsunami”, as the event is being described by some.

For sure, some cutbacks in staff by companies cannot be avoided. But why is streamlining done only during a downturn? Why can’t companies here run a tight ship even in good times, so that the chances of resorting to lay-offs and retrenchment are slimmer? Too many companies here go on a hiring binge in good times. This has got to stop.


This Post has 1 Comment Add your own!
Ray - November 11, 2008 at 12:29 AM

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