Crisis could drive banks to lay off 7,000 employees

Brokers and loan administrators working in banks told Business Standard that some employees have already been laid off and others are in the process of being fired, especially as of next year. The list of banks in this situation includes Banca Comerciala Romana (BCR), Romania’s largest lender in terms of assets, Banca Romana de Dezvoltare (BRD), Banca Transilvania, Citibank, Banca Romaneasca, RBS Romania, Piraeus Bank, OTP, and Credit Europe Bank, according to sources.

“We are expecting restructuring processes in the first half of 2009. Probably 7,000 employees working in the banking system will lose their jobs. Some 30 percent of these have limited period contracts, which may not be renewed. We are talking about 10-20 percent of persons employed in the banking system. Bankers are reluctant to make statements regarding this situation, because they do not want to initiate restructuring processes,” Constantin Paraschiv, President of the Federation of Trade Unions in the Insurance and Bank Sectors (FSAB), told Business Standard.

Some 71,505 people work in the system, of which more than half are employed by banks which rank among the top ten players in terms of assets.

“Compensation packages could range from RON 10,000-200,000 [some €2,500-50,000] depending on seniority. Considering most employees are relatively new in the system, we can talk about an average level of compensatory payments worth some RON 50,000-60,000 [some €12,700-15,200],” explained Paraschiv.

He added that restructuring programs were out of the question for banks such as BRD, Raiffeisen, UniCredit Tiriac, Bancpost, and Romexterra, but that these could become a reality in 2009. “But owing to the fact that employers must give two months notice, we are not expecting any restructuring processes in the coming 60 days.” Players on this market are currently waiting to see if lending will maintain a growth pace, considering it is expected to slow fourfold in 2009. Major banks have announced they will lay off hundreds of thousands of employees worldwide, and this wave is expected to hit their Romanian branches, considering that 36 of the 42 banks operating on the local market are controlled by international financial groups. “The liquidity crisis is massive. Some bank employees are desperate about the possibility of loosing their jobs, because they have had nothing to do for so many weeks, and want to look for another job as soon as possible,” said a middle-manager of a top lending institution. Financial market specialists indicate that the focus set on retail expansion could be a long-term problem, and the crisis “is a good lesson for banks.”

‘We are expecting restructuring processes in the first half of 2009. Probably 7,000 employees working in the banking system will lose their jobs. Some 30 percent of these have limited period contracts, which may not be renewed' Constantin Paraschiv President, FSAB