A customer deposits money as bank staff count money at a Vietcombank branch in Hanoi
Nguyen Thu Phuong, a 26-year-old accountant with a commercial bank in Hanoi, scours websites of employment agencies everyday, looking for recruitment information.
"My bank is cutting employees as business reduces and it implements its restructuring plan. Four staff members in my office have been laid off over the last few months," she said. "Many of my colleagues are also actively seeking jobs."
Phuong is among many employees in the banking sector worried about losing their jobs as part of banks' cost cutting measures in the face of declining profits.
Commercial bank ACB laid off 223 employees in the first quarter of this year, and cut salaries and allowances by VND100 billion (US$4.76 million). During this period, the average monthly salary and allowances of an employee fell by 30 percent to VND9.5 million.
The Maritime Bank plans to cut 679 employees this year. In 2012, it laid off 1,060 people. Employees who have not lost their jobs have had to take on the work of the laid-off staff.
Cao Sy Kiem, former governor of the State Bank of Vietnam, said banks cutting back on their staff was a normal measure as low credit expansion and high bad debts pushed profits down.
"Banks now are reducing their spending as they restructure to improve operational efficiency. Cutting the staff is one of the measures to lower costs," he said. "The situation could continue into the next year unless the economy shows signs of recovery."
ACB's first quarter profits fell by 50 percent year-on-year to VND395 billion, according to the bank's financial report. Maritime Bank's pre-tax profits for the first quarter fell 70 percent over the same period in 2012 to VND255.4 billion.
Non-performing loans reported by commercial lenders stood at 4.51 percent at the end of March, Deputy Prime Minister Nguyen Xuan Phuc told the National Assembly on May 20, down from the central bank's estimate of 7.8 percent at the end of last year. Credit-rating companies estimate bad debt at between 10 percent and 20 percent, according to JPMorgan Chase & Co.
The central bank has said that around 10 commercial lenders will be restructured by the end of this year. So far, three small lenders in Ho Chi Minh City have been merged to form the Saigon Commercial Bank, while Habubank has been acquired by Saigon-Hanoi Bank.
Nguyen Thi Van Anh, managing director of recruitment company Navigos Search, said banks had started cutting employees when their business started falling two years ago.
The sharp cuts are also happening because of redundant employees at banks which had large demand for staff 5-6 years ago. Then, many banks were announcing new recruitments every quarter, every month even, she said.
At that time, many commercial banks were expanding their network to serve increasing demand for capital as the local stock and financial markets expanded rapidly, she explained.
Despite cutting back on staff, banks are still finding it hard to fill up high positions. It takes them 3-6 months to find a suitable person for such positions, she said. "Very few meet the requirements of such jobs."
Anh said the banks' business difficulties have not yet been solved, so the trend to cut employees is likely to persist for the next 1-2 years.
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