By NATARIO McKENZIE
Tribune Business Reporter
The Government was yesterday urged to do all it could to “protect as many Bahamian jobs as possible” at CIBC FirstCaribbean International Bank (FCIB), given the potential forced lay-offs its regional restructuring plans may involve.
Noting that the Bahamian bank’s year-to-date earnings had been slashed by two-thirds year-over-year to just $9.9 million, Free National Movement (FNM) chairman, Darron Cash, said CIBC FirstCaribbean’s “desire to retrench” was easily seen.
The bank’s regional chief executive, in a letter to staff, hinted that the bulk of any lay-offs - voluntary or otherwise - was likely to come from middle management, which he said consisted of “too many layers”.
Rik Parkhill also said CIBC FirstCaribbean was set to “consolidate its operations”, indicating that it was likely to centralise certain back office operations in just one country.
That will not be good news for the Bahamas bank, as this nation’s high labour costs mean it cannot compete with the likes of Jamaica when it comes to ‘consolidation’ and ‘outsourcing’.
In a letter seen by Tribune Business, Mr Parkhill informed workers that in order to deal with challenges stemming from the global recession, CIBC FirstCaribbean had undertaken an 18-24 month initiative to improve its overall efficiency “by simplifying its organisational structure and consolidating operations.
“Part of this initiative is a reduction in our workforce. We will start by offering a voluntary early retirement programme for eligible employees, and a voluntary separation programme for those employees who may wish to leave the company, but are not eligible for early retirement,” Mr Parkhill said.
“Applications received for consideration will be assessed to ensure our ability to deliver continually improving customer service. We will move to decisions on redundant positions only to the extent necessary....
“This decision to restructure is clearly not one that we have taken lightly, but one that must be taken to enhance the competitiveness and ability of CIBC FirstCaribbean to service its customers better and more efficiently, and ultimately to grow. We intend to consult with governments, regulators and our union partners before executing this programme.”
Hinting that middle management positions may be slashed, Mr Parkhill said: “Over the years too many layers of management have been put in place. These layers elevate costs and impede timely decision making and our responsiveness to our customers.”
He added that the recession had a negative impact on CIBC FirstCaribbean’s profitability due to increased loan losses and fewer revenue-generating opportunities. Operating costs have also increased.
Mr Cash yesterday called on the Government to do all it could to assist Bahamian workers. “FCIB is a solid company with a significant number of talented Bahamians on staff and in key leadership positions,” he added.
“It is very disheartening to hear of the pending staff reductions. The calls for early retirements and voluntary separations does not ease the pain in these very difficult economic times when hundreds of people are pursuing the same job.
“Despite the fact that FCIB is traded locally -with attractive compensation arrangements and benefits - this company is still very much bottom line-focused and driven,” Mr Cash added.
“With current year-to-date earnings of $9.9 million compared to $30.4 million last year, the desire to retrench is understood. The challenge for this government is what do they propose to do about it?
“They must certainly do everything in their power to protect as many Bahamian jobs as possible. Their track record in this regard is not good. Too often they seem to turn their backs on Bahamian workers. The opportunity is there for meaningful discussions to ascertain what Government can do to assist so that, as a jurisdiction, the Bahamas does all that it can to help the bank - and others-- achieve and maintain the competitiveness they are pursuing.
“FCIB made it clear that the increasing costs of doing business in the Bahamas are a significant factor. They deflected the hard question of the impact of increased bank fees, but the implication is fairly obvious. The increase hurt, and in some way seems to have contributed to this planned reduction. The coming VAT cannot help. Similarly, one wonders what the impact of any Mortgage Relief 2.0 will be. The outcry from the banks leave little room for optimism.”