DBS to cut 6% workforce this month as Q3 gains plunge
Updated: 2008-11-08 07:54
By Lillian Liu(HK Edition)
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DBS Group says it will cut about 900 jobs, or about 6 percent of its workforce. AP |
DBS Group will slash 6 percent of its workforce this month mainly in its key operations in Singapore and Hong Kong after the bank reported a 38 percent drop in third-quarter profits.
Richard Stanley, chief executive of the bank, said the company will retrench 900 staff out of its 15,000 global workforce later this month. The job cut, which will affect all levels of the group, is the largest manpower reduction ever made by the bank.
DBS, however, said it has no plans for further job cuts and clarified that there will be no salary cuts. Back in 2001, DBS laid off 200 staff members in Singapore and trimmed employee's paycheck.
"To streamline the organization, I believe we must run a tighter ship," Stanley told reporters at a press conference. "This is a painful decision for DBS and for me personally but it is something we have to do," he added.
Amy Yip, chief executive officer of the group's Hong Kong operation, said the bank wanted to use this opportunity to consolidate the group and to be more productive and efficient. "The reduction does not reflect our still sound financial situation," she added.
The Singapore-based banking group said its net income fell to S$379 million (HK$1.96 billion) for the three months ended September 30, lower than market expectations and the sharpest profit decline in two years.
Provisions for investments including collateralized debt obligations (CDOs) rose 59 percent to S$448 million (HK$2.32 billion) from three months earlier. Allowances for soured loans, plus investments in debt securities and CDOs not linked to asset-backed securities, had more than tripled to S$319 million (HK$1.65 billion).
"The operating environment is increasingly challenging for financial institutions the world over," Stanley said in a statement. "We took up-front prudential levels of allowances to strengthen our balance sheet."
The bank posted trading losses of S$13 million (HK$67.5 million), including a S$74 million (HK$384 million) gain from the reclassification of some assets, the statement said. It also set aside S$70 million (HK$363 million) for compensation to some customers that had purchased structured products tied to collapsed Lehman Brothers Holdings.
DBS held S$1.13 billion (HK$5.87 million) worth of CDOs, up from S$1.11 billion (HK$5.76 million) in the previous three months. That includes S$263 million (HK$1.36 billion) linked to asset-backed securities.
DBS said the laid-off staff from the bank will be paid the equivalent of one month's salary for every year of service as per market practice.
Some 150,000 financial service staff has been made redundant worldwide since the credit crunch began.
(HK Edition 11/08/2008 page2)