• Wednesday, Aug 12, 2020
  • Last Update : 06:15 pm

Job, salary cut create panic in banking sector

  • Published at 07:12 pm July 12th, 2020
Job cuts

AB Bank terminates 80 officials, five banks cut staff salaries

Masudur Rahman (not real name), a senior officer of a private commercial bank, is frustrated and worried over the ongoing salary cut moves by several commercial banks. 

Not only Masud, almost all bankers of private commercial banks are disappointed and in the states fear and anxiety over salary cut moves and possibility of losing jobs.

Five private commercial banks in the country have already implemented salary cut initiatives to adjust operational costs driven by the coronavirus pandemic, crippling banking business for above three months.

At the latest, One Bank on July 9 announced pay cuts for their officers. Earlier, Al Arafah Islami Bank, Exim Bank, Citi Bank and AB Bank have cut salaries of their staff.

On July 09, One Bank management issued letters to their officials, announcing that basic salary would be reduced by 5 to 10%, effective from July 01.

 However, salary cut would not take place for those drawing below Tk50,000 per month at One Bank.

In June, for the first time, City Bank slashed its staffers’ salaries by 10% to offset the losses caused by the novel coronavirus outbreak. The pay cuts will be effective from June 1 this year and last till December 31 this year.

City Bank managing director and CEO Mashrur Arefin told the Dhaka Tribune that they had to cut the salaries under constraints as the bank had no alternative to survive.

Earlier, On June 14, Bangladesh Association of Banks (BAB) issued a 13- point recommendation to private banks that include as high as 15% salary cut.

However, senior bankers said the salary cut would create multidimensional problems including social issues for bank staff.

Private commercial AB bank is not just cutting the salaries of their staff; it terminated at least 80 bank staff.

"The management of the Bank has decided to terminate your employment from the service of the bank effective July 12, 2020," says a termination letter of AB bank issued to a bank official.

"Please note that on termination you will be paid all dues as per AB Bank staff service rules," reads the letter. 

Talking to Dhaka Tribune, AB Bank President and Managing Director Tarique Afzal said "Almost all of them have resigned and only a few were terminated."

"How can a bank staff keep his or her job, if he or she fails to perform even after 20 years in job?" he questioned.

"We have trained them to improve their skills and performances, but they have failed. Banks can’t perform without efficient human resources," he added.

AB Bank top official said the move had been taken as there had been no other option to “protect the depositors’ money”.

Talking to Dhaka Tribune, Former Bangladesh Bank Governor Salehuddin Ahmed said the termination and salary cut were not logical in any way.  Other serving bank staff would be disappointed by salary cut and termination, he added. 

The decisions amid coronavirus were the wrong signal for other sectors, said Salehuddin Ahmed.

He mentioned the banks could reduce other operating costs through reducing office expenses, suspending new purchases and new appointments, etc.

The former Chairman of Association of Bankers, Bangladesh (ABB) Syed Mahbubur Rahman also said the salary cut and termination were not the proper ways on reducing cost.

“Banks should prioritize reducing other costs like office costs, instead of cutting staff salaries,” Mahbub, also the managing director of Mutual Trust Bank, added.

“Now we should focus on rationalizing office spaces and reducing other costs,” he said further.

Presently, about 110, 000 people are employed at 41 commercial banks in the country.

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