The integration of FDH Bank and Malawi Savings Bank (MSB) will see some 250 jobs being declared redundant, FDH Financial Holdings have said.
In a statement released Wednesday signed by FDH Group Head of Marketing Sobhuza Ngwenya, FDH which acquired 80% shareholding in MSB on July 2, 2015, said the operational requirements and the need to fulfill their contractual obligations with Malawi Government in the sale and purchase agreement, have resulted in some positions being declared redundant.
“In total, approximately 250 employees from both FDH and MSB will be affected. This notwithstanding the merged bank will be among the biggest employers in the local banking sector,” said Ngwenya in the statement.
He however said the implementation of the redundancy program is in accordance with the Labour and Employment Laws of Malawi and good labour practice.
“This process has been undertaken in consultation with the Ministry of Labour and Manpower Development. In approving the merger, the Competition and Fair Trading Commission (CFTC) also recognized the need for FDH the implement a redundancy initiative as part of the business optimization process,” said Ngwenya.
“FDH recognizes that its employees will be key and expected to play a leading role in spearheading the merged Bank towards the successful attainment of its vision and mission.”
“ Although the core business strategy towards achieving the top bank status shall be driven by technology (IT) it is internally recognized that that the central pillar for growth is the Bank’s human assets (the people),” adds Ngwenya in the statement.
Ngwenya also said no FDH Bank or MSB branch will be closed as a result of this merger of FDH bank and MSB, even in locations where we have duplication of the branches
Giving an update of the integration process, Ngwenya said the IT integration is under way.
“FDH has invested in the world class T24 R14 system using an amount in excess of US$4 million (MKW 3.5 billion). First of all, all FDH bank customers will be migrated from the current T24 R10 core banking system to T24 R14 version. We will then move MSB Customers from the current Rubicon system to the T24 R14 platform. This process is expected to be concluded by the middle of May 2016.”
“ATM Integration is also in progress. Very shortly, FDH bank and MSB customers will be able to use either of the Banks’ ATMs as their ‘home’ bank’s machine i.e. they will not be paying a connectivity fee associated with transacting at a different bank’s ATM,” said Ngwenya in the statement.
He also noted that FDH Financial Holdings has several obligations under the Share Purchase Agreement (SPA) with the Malawi government one of which is recapitalize MSB to ensure that it is compliant to the regulations set by the Registrar of Financial Institutions.
“The second (obligation) is to turn around the Bank to be able to reduce the cost to income ratios which was at above 89 percent to around 60 percent within the first year. The third is to be able to ensure that Malawians are given a chance to get a share in the ownership of the Bank by listing the merged Bank on the Malawi Stock Exchange within 3 years,” said Ngwenya in the statement.
FDH Financial Holdings chief executive officer Thom Mpinganjira is on record saying the merger of MSB and FDH will be guided by the decisions of the Registrar of Financial Institutions, who is the governor of the Reserve Bank of Malawi (RBM).
“In matters of employment a job can never be guaranteed; it depends on performance. To guarantee a job means whether one performs or not they will keep their job. That is not so in FDH and cannot be so in MSB and I doubt whether there is any organisation that does that,” Mpinganjira said.
Government on July 2 2015 disposed of 75 percent of its shares in MSB which were acquired by FDH Financial Holdings Limited in a controversial deal that drew a backlash from members of Parliament (MPs) and civil society organisations (CSOs) who opposed the sale.
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