KUALA LUMPUR: RHB Capital Bhd (RHBCap) plans to trim about 15 per cent of its workforce, becoming the second local banking group to do so in recent months amid a tough economic landscape.
CIMB Group Holdings Bhd trimmed its workforce by 11.1 per cent this year through a mutual separation scheme to meet its cost-to-income plans outlined in its T18 strategy.
RHBCap is looking at reducing its staff strength by about 2,700 via a career transition scheme (CTS), which is similar to the one offered by Maxis Bhd in 2013 as part of the latter’s plan to cut costs and make the telco more agile.
RHBCap’s CTS was part of its rationalisation exercise, said its managing director Datuk Khairussaleh Ramli in an email to staff on Tuesday.
RHBCap had almost 18,000 employees as at December last year.
“Similar to many financial institutions in Malaysia, we have embarked on our transformation journeys to implement the necessary business strategies in order to ensure the group remains relevant, competitive and resilient,” he said.
Khairussaleh noted that the CTS was voluntary in nature and would allow employees to pursue a different career outside the group.
“The CTS has been designed to be fair both to the employees and to the organisation. During the development of the scheme, our primary concern was to ensure that appropriate care is extended to employees who apply for the scheme taking into consideration the different aspects of their needs from an appropriate level of remuneration to their professional development and personal well-being,” he said.
“Training will be provided to successful applicants to facilitate their transition to the new role in their next career phase,” Khairussaleh added.
Sources said the staff could submit their applications from yesterday until the end of this month.
If the employees choose to leave, they will be compensated with 1.25 times basic salary multiplied by the number of years with the bank.
RHBCap had earlier announced its proposed corporate restructuring, which would see RHB Banking Group moving towards a bank holding company structure.
It will also see RHBCap raising RM2.5 bilion in capital through a rights issue, which is expected to be completed by next month.
Under the restructuring, RHBCap will transfer certain assets and liabilities to RHB Bank Bhd for RM3.71 billion.
Meanwhile, Maybank Investment Bank (Maybank IB) said RHBCap’s shareholders had approved its rights issue/restructuring plans and the management hoped to fix the pricing next week.
“We see a positive enhancement to (RHBCap’s) financial year 2016 return on equity by about 1.3 percentage point from 8.2 per cent to 9.5 per cent,” Maybank IB said in a report yesterday.
It cut RHBCap’s FY15/16/17 earnings forecasts by eight per cent, 15 per cent and 17 per cent, respectively, on higher credit costs and lower non-interest income.
RHBCap’s net profit rose to RM2.04 billion last year, up from RM1.83 billion in 2013.