Hong Leong Bank, Islamic arm to cut workforce

PETALING JAYA: Hong Leong Bank Bhd and Hong Leong Islamic Bank Bhd have become the latest in the growing list of banks offering severance packages to its employees in an effort to reduce operational costs through a mutual separation scheme (MSS).
"Against an increasingly competitive environment, we need to strengthen our organisation by enhancing productivity and efficiency. We have to continually review our business and adapt to maintain our competitiveness," group managing director and CEO Tan Kong Khoon said in a statement yesterday.
He said the MSS, which is being offered to all permanent staff at all levels, functions and locations on a voluntary basis, will create an opportunity for the bank and its employees to gain mutual benefits.
Final approval of MSS applications at Hong Leong Bank and Hong Leong Islamic Bank will be based strictly on business and operational requirements.
The bank did not disclose the total number of employees it has and how many employees it plans to let go. It also did not disclose the estimated cost of the MSS.
Hong Leong Bank is the latest in a list of banks that have undergone or are going through job cuts amid a challenging economic environment.
Last month, RHB Capital Bhd (RHBCap) announced a voluntary career transition scheme to strengthen its fundamentals, improve productivity and optimise manpower. RHBCap has some 18,000 employees and analysts estimated it cost the group RM332 million to carry out the scheme.
Affin Hwang Capital, the investment banking arm of Affin Holdings Bhd, is also in the midst of a rationalisation and consolidation exercise. This comes almost a year after the merger of the investment banking businesses of Affin and HwangDBS (M) Bhd.
Earlier, in July, CIMB Group Holdings Bhd completed its MSS exercise, which involved a total of 3,599 personnel comprising 1,891 in Malaysia and 1,708 in Indonesia. The MSS cost RM443 million and is expected to bring savings of RM292 million a year.
Apart from local financial institutions, foreign-owned banks such as Standard Chartered Plc have also announced job cuts. In January, the London-based bank announced an 11% reduction in its Malaysian headcount.
The last time Hong Leong Bank offered a separation scheme for its employees was back in November 2011, following the completion of its merger with EON Capital Bhd. The VSS was also extended to employees of Hong Leong Islamic Bank.
Hong Leong Bank is the fifth largest banking group in Malaysia with total assets of RM184 billion as at June 30, 2015, according to its 2015 annual report.
For the financial year ended June 30, 2015 (FY15), the bank posted record earnings of RM2.23 billion, representing a 6.2% year-on-year growth. Return on equity stood at 14.3% while net asset per share rose by 15.4% to RM9.51.