PRESS STATEMENT

SBEU TO TAKE ACTION

DOWNSIZING/CLOSURE OF BRANCHES BY STANDARD CHARTERED BANK (SCBMB)

1. It has come to our attention that SCBMB intends to downsize/close 15 branches nationwide including Bintulu in Sarawak and to relocate them to supposedly high growth centres in Peninsular Malaysia. The relocated new branches will most likely be "Financial Spas" with minimal staff.

2. SCBMB plan to destroy another 200 permanent jobs by offering a Voluntary Separation Scheme (VSS). SCBMB will replace these permanent jobs with outsourced, contract, temporary and agency employees. These VSS are not actually voluntary because the bank offered to only targeted staff in selected locations. These staff are under tremendous pressure to take up the VSS because their options are limited by the Bank's selective exercise.

3. We remain totally unconvinced of the viability of these plans (See attachment). SCBMB admits that these branches are viable now. The downsizing of the branches is designed to close down the branches in future, with the excuse that they are not generating enough business to remain viable.

4. We have nothing against banks striving for better efficiency and profitability. But these must be in the long term and must be forward and positive way. It must be a virtuous circle, not a vicious one. The long-term interest must be the sole motivation, not short-term extraordinary performance that only serves to increase remuneration of top executives.

5. At a time when the local banks are undergoing mergers and rationalization process, the foreign Banks are taking advantage of the situation to move ahead. At a time when the local banks have very strong justification to rationalise their branches and employees, SCBMB is compounding the problem by flooding the banking sector job market.

6. We are also convinced that Banking secrecy will be compromised by the employment of outsourced, contract & agency employees. SCBMB simply requests agency staff to sign a simple declaration of secrecy without proper monitoring and control. The bank engaged ex-employees as contractors to handle banking documents such as marked cheques without proper safeguards and accountability. Bank Negara Malaysia (BNM) must require vendors that provide outsourcing services to Financial Institutions to be registered with and approved by BNM to ensure that the highest standards of service and secrecy is maintained.

7. SCBMB makes much of its Global Hub in Cyberjaya. For the 300 jobs it has created the Bank has destroyed more than 2000 jobs in the past. It now intends to destroy another 200 jobs.

8. The bank attempted to justify the closure/downsizing by showing figures that the Branches in Sarawak especially Bintulu account for a minuscule portion of the bank's business volume. The Bank uses the demographics of Bintulu as a reason. SCBMB also saying that it will be better for the SCBMB exit Malaysia altogether (with only 22 million people) and relocate to China with its 1.5 Billion population?

9. SCBMB claimed that it is not downsizing in Malaysia. At this rate the Bank will close down all branches in Sarawak and most Branches in Malaysia. SCB has cut staff levels from 4000 to 2000 today. Not too long again the Bank's top Management assured us that not a single Branch will be closed. Now 4 months after closing Bandar Sri Aman & Sarikei Branch in Sarawak, it intends to close Bintulu Branch.

10. The reason why Branches in Sarawak is unable to increase business volume is simply because the Bank has been reducing staff levels for years; deliberately driving away so called low value customers through pricing and marketing mechanism. Now it is using the figures as justification for closing/downsizing the branch.

11. It reminds us of how Israel treats the Palestinians. They confined Yasser Arafat to his compound without any facilities, and then blame him for not doing enough to prevent terrorist attacks and suicide bombers. Finally it uses that as justification to declare him irrelevant and intend to eliminate him.

12. It is very likely that after 2004, foreign banks may be able to open new branches so there is no need to close any branches. Yet SCBMB is relocating the branches now because it realises that, when foreign Banks are allowed to open Branches after 2004, they may not be allowed to close existing Branches. This is the main reason why it is in a rush to relocate. SCBMB wants to put in Branches in high growth areas now so that it does not have to carry the burden of maintaining branches in fringe areas in future.

13. If every Bank is allowed to do this, then the vast areas will be deprived of banking services. Banking services is an essential service. SCBMB must balance its obligation to society against its ruthless desire for profit. The Bank generated profits of almost half a billion Ringgit in 2000. Yet it is not enough.

14. SBEU call on the SCBMB to review these plans in the long-term interest of the bank, its employees, stakeholders and customers and members of the public in Sarawak.

15. We call on BNM to carefully investigate the Bank's business plan, which is very sophisticated. We call on BNM to look after the national interest of the country.

16. We call on BNM not to approve of any branch closure or relocation until a proper study and the views of all affected parties are sought.

17. SBEU may be constraint to take drastic Protest and Industrial Actions.


ANDREW LO KIAN NYAN
GENERAL SECRETARY

8 April 2002
 

DOWN SIZING/ RESTRUCTURING DOES IT REALLY WORK?

1. SCBMB has embarked on countless schemes and initiatives in the past to carve out niche markets, better resource allocation, going for high net worth customers, good product mixed, focus on targeted customers segments. It appears to be abandoning the small and medium Industries, and small business sector in Sarawak.

2. It claimed that these Harvard and Management Gurus inspired initiatives are designed to improve service to customers and to remain competitive. It is our carefully considered view that the main motivation of these initiatives is to generate more profits, not improve customer service. In fact the bank is ever ready to drive away what it considers is low value customers. It only wants to be a bank for the rich.

3. Conventional and well proven logic will tell us that there is so much you can reduce before revenue and business volume and customer service are adversely affected. Empirical evidence anyway in the world suggests that such downsizing of branches and employees have mixed results. Even those successful downsize come with a heavy price - the destruction of the trust of employees and most importantly, customers.

4. SCBMB has have become a bank without a conscience not only to staff, but more importantly, to customers. Loyalty and long-term relationships counts for nothing.

5. The Bank's latest financial statement suggests that all these cost cutting have not worked. Even while personnel cost has come down, so does revenue.

6. The Bank has been ruthless in cutting down personnel cost to 35% of overall overhead cost. But increased administration and establishment expenses more than offset the reduction in personnel cost. This indicated that the increased cost of centralization, outsourcing and hubbing is far greater than the savings from cutting direct personnel cost.

ANDREW LO KIAN NYAN
GENERAL SECRETARY

8 April 2002