August 3, 2021

Bahamas: CIBC: ‘No Choice’ But To Cut 66 Jobs

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CIBC_t670By Natario Mckenzie From Tribune 242

CIBC First Caribbean International Bank (FCIB) yesterday confirmed plans to cut 66 jobs from its Bahamian workforce, revealing that those posts would be outsourced to Jamaica.

A joint letter from the bank’s Barbados-group chief executive, Rik Parkhill, and Bahamian managing director Marie Rodland-Allen informed employees that despite the bank’s voluntary Bahamian separation package offered last October, it “must move to an involuntary redundancy phase to achieve the desired operational effectiveness targets”.

The majority of terminated jobs will be in CIBC FirstCaribbean’s operations group, with 56 staff to be made redundant. Ten redundancies will come elsewhere in the Bahamian operation.

“The majority of the roles that will fall away will be in the operations group, where there will be continued focus on: process reengineering and automation [and] relocating activities in the Bahamas Operations Centre,” Mr Parkhill and Mrs Rodland-Allen wrote.

“There will be a transfer of some processes to an expanded facility in Jamaica, which will result in the elimination of 66 roles in the Bahamas, 56 of them in operations. In addition to the operations impact, 10 additional roles will fall away.”

This is close to what Tribune Business had predicted last month, as given CIBC FirstCaribbean’s intentions to cut employee headcount by 10 per cent, this indicated 70-75 persons from its 747-strong workforce at the 2012 year-end could be sent home.

The BISX-listed bank is doing its best to soften the impact, as the redundancies will play out over a 20-month period, starting in May 2014 and ending in October 2015.

However, that will be of little comfort to those losing their jobs, or the Bahamian economy and society in general.

It also serves as a sharp reminder to the Christie administration that much work on the economic front remains to be done, the Prime Minister having touted the recent fall in the official unemployment rate from 16.2 per cent to 15.4 per cent, plus numerous foreign direct investment (FDI) projects.

The CIBC FirstCaribbean move will also be especially galling to Bahamians given that jobs are being switched from this nation to Jamaica, probably because of that country’s low-cost labour force and IT-trained workers.

A website believed connected to a Cabinet Minister suggested at the weekend that legislation may be required to stop the Canadian banks, including Scotiabank and Royal Bank of Canada, from outsourcing back office functions to one central location in the Caribbean.

Both they, and CIBC FirstCaribbean, are looking to cut costs, extract efficiencies and return to historical profit levels in an environment charcterised by high levels of non-performing loans and net losses.

Scotiabank, at least, is thought poised to take similar action to CIBC FirstCaribbean, and some bankers have privately told Tribune Business they believe as many as 150-200 jobs in Bahamas-based, Canadian-owned banks could be art risk.

Meanwhile, the CIBC FirstCaribbean letter to Bahamian staff said 89 persons had applied to the voluntary separation programme, with 74 accepted. This indicates that, ultimately, the bank’s Bahamian workforce may be reduced by 140 persons come October 2015.

The bank had offered voluntary early retirement to eligible employees, and voluntary separation to employees who are not eligible for early retirement but wish to leave

Theresa Mortimer, president of the Bahamas Financial Services Union (BFSU), appeared shocked at the extent of the lay-offs when contacted by Tribune Business yesterday afternoon.

She said she was not prepared to comment on the matter until she got a clear understanding of what was going on, adding that she had been made aware the bank’s executives had met with Prime Minister Perry Christie. She is seeking to meet with him as well.

“Our recent performance, as seen in our declining profitability over the past five years and our first ever loss last fiscal, has left us with no other option but to re-examine our structure and way of doing business to meet the challenges facing us,” Mr Parkhill and Mrs Rodland-Allen wrote.

“We must make the painful decisions now to put ourselves in a better position for the future and to safeguard the continuing employment of the other employees in the Bahamas. We assure you that we have done whatever we can to minimise any job losses.”

The letter further stated: “As part of the restructuring exercise, however, a number of opportunities have been created through new and replacement roles. Following the closure of the voluntary programmes, we conducted a redundancy analysis throughout the organisation, and there will be an opportunity for impacted employees to apply where there are any job openings.

“The redundancy programme is expected to begin in May of this year, and to be completed by 31 October 2015. This timing is contingent on our receiving regulatory approvals for the proposed changes.”

CIBC FirstCaribbean warned that lay-offs were imminent last month as it moved to cut regional staffing costs by 10 per cent. The bank – which has a 3,500-strong workforce in the Caribbean – said it was looking to cut employee costs by 10 per cent.

The Bahamian operation is thought to account for around 40 per cent of CIBC FirstCaribbean’s total business, and its 2013 annual report shows the Bahamas generated 49 per cent – almost half – its $176 million retail and business banking revenues. The Bahamas operation, though, suffered a net loss of around $18 million

The restructuring is part of the bank’s turnaround plan, following the regional $27.5 million net loss for the fiscal year ended October 31, 2013. It is booking a one-off $37.6 million restructuring charge as a result, with some $25.695 million related to severance pay.

Mr Parkhill and Mrs Rodland-Allen added: “We hasten to add that the restructuring of our operations is about more than a reduction in our staff numbers.

“It is to contain spiraling costs in all areas of our operations, and to implement a new structure that will allow us to take full advantage of new growth opportunities.

“This exercise became necessary because the bank is challenged by limited revenue growth, increased taxes and rising staff costs…. Several credit enhancement and risk remediation projects that we embarked on over the past two years are coming to an end and, given the operational efficiencies we are seeing, it has become necessary to adjust our staffing structure to adequately serve the addressable opportunities within the market.”

They added: “This is not an easy message for us to convey to you as your chief executive and managing director, but we have reached a stage where we have no choice.”

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