Bank workers face early retirement

Due to economic pressures, a number of local banks have recently decided to launch early retirement programs for their senior employees. First Commercial Bank (第一銀行) plans to launch its program by the end of this month with as many as 300 employees facing early retirement. Taiwan Cooperative Bank (合庫) is likely to propose similar programs soon with about 200 employees retiring early, according to a local media report.

In addition to the early retirement programs, local banks are also cutting regular bonuses for management, in an attempt to reduce operating costs. The measures have been described as salary cuts by local media.

For example, First Commercial Bank has decided recently to cut down monthly management bonuses. The monthly bonus for branch managers has been cut from NT$30,000 to NT$25,000 per month.

Executives of First Commercial Bank said the measures were meant to differentiate between salaries of large and small branch managers, and thus make the compensation system more fair.

Taiwan Cooperative Bank has also completed its early retirement programs for senior employees, which it is likely to launch around September.

According to the program, anyone who has worked at the bank for more than 25 years or has reach age 55 can receive extra pay for seven months after leaving the company, in addition to the original retirement benefits. On average, the annual pay for employees of Taiwan Cooperative Bank is around NT$1.2 million. So those retiring early will receive around NT$700,000 more than the original retirement package.

Executives of Taiwan Cooperative Bank said there have been quite a few employees inquiring about the program recently. They estimate that as many as 200 employees might take the package as soon as the program is launched. Taiwan Cooperative Bank could hire three new employees while reducing one senior employee, according to the executives.

Market watchers said the decision by the two banks to offer an early retirement program is linked to merger talks which took place earlier this year. By reducing redundancies now, the two large banks can avoid immediate layoffs after the merger.

First Commercial Bank is currently discussing mergers with two smaller banks, including Da An Commercial Bank (大安銀行) and Pan Asia Bank (泛亞銀行). Taiwan Cooperative Bank has been conducting merger talks with Chinfon Commercial Bank (慶豐銀行).