Are national banks going ‘overboard’ on layoff?

Despite an asset base of 87 pc, national banks in UAE employ 79 pc staff

ABU DHABI: By easing out about 1500 employees and downing shutters on 45 branches during the first six months alone in the current financial year, are the UAE national banks going a bit overboard in downsizing their workforce?

Obviously, the number of bank employees rendered redundant during the year-until-today would be much higher as Emirates NBD itself has admitted that the Dubai’s largest bank has laid off 1300 in the past couple of months; and more so, as there are several other banks such as ADCB that had gone the layoff route.

If the workforce level at the foreign banks operating in the UAE’s market, led by the likes of HSBC, Standard Chartered and Citi, can be viewed as a benchmark for the ‘optimum staff level’, either local banks are currently ‘understaffed’ or the foreign banks are ‘overstaffed, though there exists no fool-proof gauge to measure the ‘optimum’.

46 staff per branch vs 92 at foreign banks 

While the banking system in the country employs 35,423 staff as of June 30, 2020, down from 36,971 as of December 31, 2016, national banks with 611 branches and 64 pay offices & electronic branch units, employ 28,219 as of June 30, 2020, whereas the 27 foreign commercial banks with 78 branches employ 7,204 staff.

This works out a number like 46 employees per branch for national banks versus 92 staff per branch for a foreign bank.

Though there can’t be any ideal ‘one-size-fits-all’ for workforce at any organisation, a comparison of the employee strength between the foreign banks and local banks in relation to their respective asset size shows that foreign banks employ much more than their local counterparts in the UAE as per the latest headcount.

Having said that, doesn’t subscribe to the view that even this criterion alone should be the basis for drawing such conclusions on workforce optimisation, but may prove to be the most plausible one available.

The latest aggregate balance sheet of the national banks released by the Central Bank shows that while the total assets of the banking system in the UAE as of June end, 2020 was AED3.191 trillion, the national banks manage AED2.778 trillion or 87.06 per cent of the total assets in the banking system, with the remaining only 12.94 per cent lying with the foreign banks.

But when it comes to the workforce sharing, foreign banks employ almost 21 per cent of the total employees in the system leaving about only 79 per cent with the national banks that sit on more than 87 per cent of the total assets.

The statistics on the asset distribution between the national banks and foreign banks also show that the share of assets managed by the foreign banks has been steadily declining during the past three and half years, from 14.36 per cent as of December 31, 2018, down to 12.94 per cent as of June 30, 2020.

And so has also been the share of credit during the said period.

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