Hong Leong group downsizing workforce

Tough times: Hong Leong is not alone in announcing a downsizing of its workforce in recent times.

KUALA LUMPUR: Hong Leong Bank Bhd and Hong Leong Islamic Bank Bhd announced a mutual separation scheme (MSS) in a move to strengthen its operational efficiencies.

This will be the second time the Hong Leong group has announced a separation scheme for its staff in a span of about four years.

The fifth largest banking group by asset size announced a voluntary separation scheme after it completed its merger with the EON Bank Group back in 2011.

For the separation exercise this round, group managing director and chief exective officer Tan Kong Khoon said that this time, the MSS was offered to all permanent staff on all levels, functions and locations on a voluntary basis.

The MSS would create an opportunity for both banks and employees to gain mutual benefits, he added.

“Against a 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,” he said.

The final approval of the MSS applications at the banks would be strictly on business and operational requirements.

Hong Leong is not alone in announcing a downsizing of its workforce in recent times.

In February, a major organisational reshuffle had taken place at CIMB Group Holdings Bhd aimed largely at driving its cost-to-income ratio down to less than 50% by 2018.

To control costs, CIMB was the first local bank in recent times to rationalise its staff when it completed an RM443.3mil MSS in July.

The MSS involved 1.1% of CIMB’s workforce in Malaysia and Indonesia, with targetted yearly savings of RM292mil for the group.

Adding to the list was RHB Capital Bhd, the fourth largest banking group by asset size, which had recently embarked on a ‘rightsizing exercise’ by offering its 17,500 employees a career transition scheme.

Affin Holdings Bhd’s investment banking arm Affin Hwang Capital, had also announced a rationalisation exercise, following the merger between the investment banking businesses of both Affin and HwangDBS (M) Bhd, which took place in 2014.

Other than the banking sector, the oil and gas (O&G) sector is affected too by the low oil price environment that companies are operating in today.

O&G company Shell Malaysia announced last month a reorganisation of its upstream division, which will see a reduction of 1,300 jobs – out of its total workforce of 6,500 – over the next two years.

Shell Malaysia, a unit of Royal Dutch Shell PLC, said the programme aimed to improve efficiency and remove complexity to become a more agile and competitive company.