CIMB's workforce reduction exercise costs it RM443.3 million

KUALA LUMPUR: CIMB Group Holdings Bhd and PT CIMB Niaga TBK have completed their mutual separation scheme (MSS) exercise with a rationalisation of 11.1% of the total workforce in Malaysia and Indonesia, costing RM443.3 million.
The resultant savings from the headcount reduction is however estimated to be RM291.6 million per year, which translates to an 18.2 months payback, it said in a statement yesterday.
A total of 3,599 applications, consisting of 1,891 from Malaysia and 1,708 from Indonesia, were approved.
"The MSS was introduced as part of our continued efforts to enhance efficiency and productivity within the group. With the completion of the MSS, we are on track to meet the targets set in our cost-to-income plans outlined in our T18 strategy," CIMB group chief executiveTengku Datuk Zafrul Tengku Abdul Aziz said.
In May, CIMB announced that the MSS was offered strictly on a voluntary basis and all applications were expected to be submitted by May 29, 2015.
Employees who have successfully applied for the MSS would receive packages based on rank and years of service, as well as options for extended medical cover for three years, and participation in re-skilling and outplacement programmes.
The group, which has over 41,000 employees in 17 countries, had said that the MSS was put in place after considering the current operating cost structures and desired efficiency levels across the franchise.
It was reported that CIMB will not implement the MSS outside Malaysia and Indonesia.
Besides Malaysia and Indonesia, CIMB is also present in Singapore, Thailand, Cambodia, Brunei, Vietnam, Myanmar, Laos, China, Hong Kong, Bahrain, India, Sri Lanka, Taiwan, Korea, the US and UK.
CIMB's net profit for the first quarter ended March 31, 2015 slumped 45.59% to RM580.12 million from RM1.07 billion in the previous corresponding period, mainly due to exceptional restructuring expenses of RM202 million.
Excluding that, CIMB's earnings would have dropped 26.6% on the back of higher corporate loan provisions from its Indonesian operations.