The nation's top three commercial banks are planning to ax up to 1,000 excess staff, local media reported yesterday.
Speculation that Hua Nan Commercial Bank (華南銀行), Chang Hwa Bank (彰化銀行) and First Commercial Bank (第一銀行) are going to reduce staff comes as the Ministry of Finance continues to pressure banks to merge.
But the report was denied immediately by executives of the three banks. Executives at the banks claimed yesterday that although the banks have early-retirement schemes, they are strictly on a volunteer basis.
"No employees will be forced to retire," one unidentified bank executive said.
But so far these early-retirement programs have not reduced staff significantly, with less than 200 choosing to retire early since November.
Because the finance ministry is determined to reduce the number of state-controlled banks and cut costs, a number of commercial banks have launched early retirement programs for their senior staff in recent years.
Before privatization in the mid-1990s, Hua Nan was a state-owned bank. There are still quite a few senior employees who have been working since then, according to Hua Nan executives. The salary of these senior employees, on average, is equal to the cost of two to four new employees.
In order to cut operating costs and avoid possible layoffs after a potential merger with another bank, Hua Nan created an early-retirement program for their employees late last year.
However, the effectiveness of the program has not been great, with only 10 employees to date accepting early retirement.
Chang Hwa Bank's retirement plan has fared better, with 140 employees opting to call it quits.
According to Chang Hwa, their 1998 early-retirement program offers a six-month salary bonus for employees who choose to retire before the end of 2003.
In a more recent revision to that plan, the bank has offered all employees under 65 years of age three month's pay for every month of early retirement. In addition, the bank will also provide the departed staff with preferential interest and loan rates.
According to reports, the early-retirement programs aim to strengthen financial organizations by bringing in fresh, new blood.
In addition, the bank executives pointed out, after the finance ministry deregulated the trust industry last year, a number of junior staff in various branches were transferred to other government agencies.
This has resulted in Hua Nan and Chang Hwa drafting plans to hire more than 100 new staff this year to cope with the needs of a changing industry.
Meanwhile, First Commercial Bank has reportedly begun a massive organizational consolidation plan, but currently has no plans to lay off staff in the foreseeable future.
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