China’s state-owned banks cut thousands of jobs as profit growth slows
China’s biggest banks have joined their western peers in eliminating thousands of jobs as the nation’s banking industry faces its most challenging year amid a slowing economy and top-down financial reforms.
The top four national banks, which reported negative to flat net profit growth for the first half of this year, reported a combined total of 22,260 jobs that have been eliminated.
Bank of China said its headcount at the end of June 2016 has decreased by 6,881 to a total of 303,161 employees, compared to the end of 2015. Agricultural Bank of China lost 4,023 staff, bringing its total to 499,059 while Industrial and Commercial Bank of China cut back by 7,635 to 458,711. China Construction Bank also shed 6,721 staff to 362,462. The four banks are the nation’s biggest banking sector employers. The trend is mirrored in the second-tier joint stock banking sector.
Different banks are calling the measures by different names, albeit some euphemistically. Agricultural Bank referred to its attrition as “human resource reform”. BOC referred to the downsizing as “adjusting its structure, exploring its potential, and innovating its mechanisms...in line with the group’s development strategy and priorities”. CCB did not make a direct reference or provide an explanation in its report. Only ICBC directly referred to its measures as an exercise in “strict cost controls”.
“China’s banks won’t openly call it ‘redundancy’ because they are state-owned,” said Shujin Chen, research director at DBS Vickers. “Instead, the banks now take to natural attrition to control staff costs. This means when employees resign they won’t be replaced. The shrinkage usually would not exceed 1 per cent of the payroll.”
China’s banks won’t openly call it ‘redundancy’ because they are state-owned. Instead, the banks now take to natural attrition to control staff costs
Employment in the banking sector saw strong growth until 2013 and it was only last year that individual banks started taking cost control measures, according to Chen. “This year, the trend has become obvious. For the people left behind the pressure to perform is enormous.”
