African Bank has this week issued notices to its staff related to a restructuring plan that will see up to 652 staff members retrenched, reports local media.
“About 650 employees at African Bank will be retrenched. This is after the bank was rescued by government from liquidation,” a source told South Africa media.
The retrenchment of 652 individuals will be around a sixth of the bank’s staff.
It is thought that a high unemployment rate and a stagnant economy or the main reasons behind the move.
“The matter is now with the Commission for Conciliation, Mediation and Arbitration (CCMA). I found the news very disturbing because African Bank was rescued so that the employees’ jobs could be saved,” the source said.
Myan Soobramoney, the national secretary for banking trade union Sasbo, confirmed that the union had received a restructuring notice in terms of the Labour Relations Act from African Bank, in which it indicated that 652 people could lose their jobs.
He said that African Bank looked like it would institute forced retrenchments, and Sasbo was fundamentally opposed to this and would not agree to them.
City Press further stated: African Bank CEO Brian Riley, in an email on Tuesday, communicated with the bank’s staff regarding the restructuring.
In response to questions on Friday, Riley said: “The bank is set to begin consultations with Sasbo, facilitated by the CCMA. An application has consequently been lodged with the CCMA for a facilitation process.
“The first consultation date of May 30 has been confirmed by all parties. Following the conclusion of this initial consultation process, which may take days or weeks, African Bank will be in a position to release further information.”
African Bank Investments Limited, the holding company of African Bank, was placed under curatorship by the SA Reserve Bank in August 2014 as the unsecured lender folded under the weight of spiralling losses.
In March last year, just before African Bank was re-launched, Riley said the bank would like to continue to cut costs, and that it may reduce its employee numbers via natural attrition.
In April last year, African Bank was re-launched with the South African Reserve Bank, the Public Investment Corporation and a consortium of six local banks as its new shareholders.
Before government rescued African Bank, it employed more than 5,500 people.
