FDH Financial Holdings Limited has fired about 250 employees as it reorganises the merging entities of FDH Bank Limited and previously wholly State-owned Malawi Savings Bank (MSB) in which the group acquired an 80 percent stake.
The 250 represent 17.6 percent of the combined staff complement of the two banks, which stood at 1 420 before retrenchment, according to the group.
In a statement titled Update on Integration of Malawi Savings Bank and FDH Bank, FDH Financial Holdings Limited head of marketing Sobhuza Ngwenya on Wednesday said the laying off of 250 employees is in line with operational requirements.
The need to fulfil the bank’s contractual obligations with the Malawi Government in the sell and purchase agreement was also a consideration in the decision, he said.
FDH Financial Holdings Limited, which bought the majority stake from Malawi Government on July 2 2015, said after the acquisition of MSB, the two institutions—MSB and FDH Bank—jointly developed a new strategy for the merged bank aimed at repositioning the brand to become the country’s top bank.
In his statement, Ngwenya said: “We now have reached a stage where we are in a position to implement the workforce transition process. Regrettably, the operational requirements and the need to fulfill our contractual obligations with Malawi Government in the sell purchase agreement have resulted in some positions being declared redundant.”
The group also said implementation of the redundancy programme was in accordance with the country’s laws. It consulted Ministry of Labour, Youth and Manpower Development on the process, said Ngwenya.
In a telephone interview yesterday, Ngwenya said FDH Bank had a staff complement of 820 whereas MSB had 600.
The statement said the 250 employees are from across all levels of employment.
FDH Financial Holdings’ bid for MSB was not without controversy as in March last year some employees of MSB wrote their management, raising a number of issues, including transparency, accountability and calculation of their benefits.
However, in response after the takeover, FDH Financial Holdings Limited chief executive officer said the group would not offer fresh employment contracts to MSB employees as they had been carried over.Thomson Mpinganjira
In a written communication to staff dated July 3 2015, Mpinganjira assured FDH Bank staff of job security.
“I would like to inform you all that we will initially run the two banks as separate businesses subject to regulatory approvals by the Reserve Bank of Malawi. This means that FDH bank employees will continue to do what they have been doing normally,” he said.
In yesterday’s statement, FDH Financial Holdings said it has invested $4 million (K3.5 billion) in T24 R14 system in its information technology (IT) integration where FDH Bank customers will be migrated from the current T24 R10 core banking system after which MSB customers will follow.
Further, the group said shortly, FDH Bank and MSB customers will be able to use either of the bank’s ATMs as their ‘home banks’ without paying for connectivity fees associated with transacting at a different bank’s ATM.
FDH Financial Holdings Limited started the integration process in July 2015 with technical assistance from Ernst & Young (EY) of South Africa following instructions by the Registrar of Financial Institutions to surrender one licence as regulations do not allow one banking licence holder to have two banking licences.
In its statement, the group also said it will maintain all MSB and FDH Bank points of representation even where the two have a duplication of branches.
Among other things, under the Share Purchase Agreement with Malawi Government, FDH has to capitalise MSB, turn around the bank and ensure that it gets listed on the Malawi Stock Exchange within three years. n