The restructuring of HBL

Reduction in staff is a pre-requisite for privatization

By AMANULLAH BASHAR
June 18 - 24, 2001

The downsizing or rightsizing, whatever you may call, of the mammoth work force i.e. around 50,000 of the three public sector banks i.e. National Bank, Habib Bank and the United Bank is certainly an uphill task before the government. Exactly speaking, the total number of employees in the three banks is estimated 49,200 which include 15000 in the NBP, 22,700 in HBL and 11, 500 in the UBL.

The financial advisors appointed by the Privatization Commission for financial restructuring of the two banks i.e. HBL and UBL placed on the board for privatization have recommended a 50 per cent lay off of the existing staff by offering them voluntary retirement schemes like Golden-hand-shake or newly coined term of Voluntary Separation Scheme (VSS).

The reduction in the number of branches and number of staff seems to be a pre-requisite to attract investors in the banking sector.

The financial restructuring emphasis on the reduction in the number of staff which cost Rs8 billion per annum to NBP, Rs12 billion to HBL and Rs5 billion to the United Bank. This huge administrative cost erodes the profitability of these public sector entities.

In order to accommodate the surplus staff, the management of these banks have to increase the number of branches irrespective to the requirement or need. Against the size of deposit of Rs316 billion, the National Bank operates with 1428 branches, Habib Bank with the deposits of Rs266 billion operations with 1755 branches while the United Bank with the deposits of Rs129 billion operates 1371 branches all over the country. It is interesting to note that with less number of branches, the NBP have a strong size of deposits of Rs316 billion as compared to Rs266 billion of HBL which have a much larger number of branches i.e. 1755. Some of the branches, it is learnt, were allowed just to please the near and dear ones having to engage their properties for opening the bank branches. Under the corrective measures, the government desires to close at least 250 branches in HBL.

The problem of overstaffing in the public sector entities was the direct result of the growing interference of the corrupt politicians who used these organizations for dumping of their supporters through appointments. These banks originally belong to the depositors or the shareholders. But these stakeholders were never consulted either before extending huge political loans or before large number of appointments without taking the merits or demerits into account. The depositors and the shareholders are now paying the cost of these discrepancies with slackening of the profits and the dividends.

It is unfortunate that once being the golden egg goose, the buyers are now reluctant to buy these banks in the presence of such a huge financial liabilities.

The management of HBL has offered a Voluntary Separation Scheme (VSS)-2001 to the employees:

This scheme offers what it calls the special incentive to the staff who would opt for the scheme. Under the scheme all those clerical and non clerical staff who joined HBL on or after August 15, 1991 are allowed a special incentive at the rate of Rs4000 per month for 36 months amounting to Rs1, 44,000/ in lump sum in addition to the VSS-2001 incentive/ benefits. This scheme was earlier confined to the staff who joined the bank in August 1991 which now has been expanded to cover the entire staff of the Bank.

All those executives/ officers who will opt in favour of VSS will also be allowed salary increase based on their appraisals for the year 2001 effective January 1, 2001, as and when announced by the management. After announcement, payment of VSS will be re-calculated and arrears will be paid to them accordingly.

All those employees governed under the new retirement benefits and completed 24 years of service as on May 31, 2001 shall be allowed a grace period of one year to become entitled for monthly pension. This relaxation is only restricted to the optees under VSS-2001, however it shall not be treated as precedent for other cases. The Godown keepers may now apply for the change of cadres as Cashiers. The last date of the offer under VSS was June 16, which was later extended up June 20.

The CBA of HBL employees however opposed the scheme and staged a two hours pen down strike to lodge their protest against the scheme. The employees called off the pen down strike after meetings with the management and some assurances.

The Secretary of HBL Employees Union (CBA) had also lodged a complaint with the labor directorate that the VSS is a violation of the IRO 1969 because the strike notice/industrial dispute is still held in abeyance. The HBL Workers Front, led by Habib Junaidi has however has strongly opposed the VSS and has claimed to launch a countrywide movement against the VSS which he says is an unjust attempt to dislodge 11000 employees from their jobs.

Compative Data NCB's for the year 2000

Bank

Deposits

Ratio

Admin. Exp.

Ratio

No. of staff

Ratio

No. of bran-
ches

Ratio

Staff

Ratio

 

Rs./Bln

 

Rs./Bln

 

Emplo-
yee

 

Bran-
ches

 

Loans

 

NBP

316

44%

8

32%

15000

30%

1428

31%

6

25%

HBL

266

37%

12

48%

22700

46%

1755

39%

14

58%

UBL

129

18%

5

21%

11500

23%

1371

30%

4

17%

Total

711

 

25

 

49200

.

4554

 

24