Standard Bank allowed to retrench and pay bonuses

Standard Bank described the planned retrenchment of over 2,000 employees in South Africa and London as "a deeply saddening process". But Africa's largest bank would have been even sadder if the judges had blocked its plans or forced it to cap bonus payments and salary increases, as Sasbo, the financial sector union, had demanded.

As it turned out, the Labour Court did not interdict the bank on bonuses and effectively allowed the retrenchments to go ahead, provided Standard Bank continues talks with the union and gives more information on the expected cost savings. An agreement must be reached by December 1st, Judge Robert Lagrange intimated. Standard Bank said the ruling "vindicates the bank's actions relating to the retrenchment process."

The ruling was closely watched, as Standard Bank's are the largest retrenchments in the

South African banking sector since Nedbank cut 10% of its workforce in 2004. Unlike its smaller rival six years ago, though, Standard Bank is profitable. Group Ceo Jacko Maree says it is keen to cut costs to avoid being forced to take more drastic measures later and it is determined to reduce its cost-to-income ratio which has reached an "unacceptable" 58.1 per cent.

The cuts will only affect Standard Bank's head office in Johannesburg and its London office. The plan was to lay off 270 employees in the UK and 1.745 people, 1.145 of whom permanent staff, in South Africa - including 65 executives and 670 managers - based on "operational requirements and not individual performance".

After days of negotiations "just over 1,000 employees are now likely to be affected," according to Suren Reddy, director of employee relations at SB, even though "the final numbers cannot yet be determined".

But there could be more retrenchments to come, Sim Tshabalala, Standard Bank's SA Ceo, said: "We do not have an organisation-wide plan, but we do not exclude the possibility of inefficiencies in pockets of the organisation," he said. "If there are inefficiencies and we are unable to preserve the profitability of the organisation, we will look at it again."

Sasbo itself seems to accept lay-offs are inevitable and damage limitation is the best it can hope for. "We are willing to speak about the numbers," Eugene Ebersohn, the union's assistant general secretary, said. "We might not get first prize, but second prize will do." But he vouched to keep the pressure on Standard Bank: "We are very interested to see what they are planning to do with their executives in terms of performance bonuses and increase, because that in itself could save a lot of money