Major South African bank looking to retrench 1,200 workers
African Bank is planning a significant restructuring, which could impact 1,200 employees and see 90 branches close across South Africa.
The bank has contemplated a Section 189A retrenchment process, with the group recording a net after-tax loss of R624 million for the six months ending March 31 2026.
The group also flagged that its costs were growing ahead of its risk-adjusted revenue. This has forced the group to focus on IT, procurement, and other operational costs.
“While we continue to explore all cost-saving avenues to minimise the impact on people, we have reached a point where we have no other option but to review our staff costs,” said the bank.
The group also plans to delay its initial public offering, which is already a year late, to 2030 amid the heightened costs.
African Bank has been on a massive acquisition drive over the past several years, spending billions to expand its operations.
The bank acquired a focused Grindrod Bank for R1.5 billion, Ubank’s assets for R80 million, and Sasfin Capital Equipment Finance and Commercial Property Finance Businesses for R3.25 billion.
While African Bank has acquired these businesses, it pulled out of a deal to buy Eskom’s R5.7 billion Home Loan book, which would have marked its entrance into secured lending.
After the deal’s conditions lapsed, African Bank said the collapse followed its board’s decision to consolidate and embed the bank’s organic and inorganic growth over the last five years.
The company said that it plans to “drive efficiencies and extract more value from the acquisitions done between 2022 and 2025.”
The group has also faced an intense leadership upheaval, with its former group CEO, Kennedy Bungane, abruptly resigning at the start of March amid poor performance and a regulatory reporting mistake.
The bank faced intense scrutiny from the Prudential Authority after a controversial loan within the group’s own subsidiaries attempted to increase its capital adequacy ratio.
Zweli Manyathi currently serves as the interim Group CEO of African Bank, having previously worked as the CEO of its Business and Commercial Banking division.
Outrage over the job cuts
Trade union SASBO has slammed African Bank’s “premature” announcement of its contemplation of the Section 189A consultation process, as well as the public nature of the announcement.
SASBO criticised the bank for not previously engaging or informing it before such a far-reaching proposal was presented.
Outside of operational costs, SASBO noted that African Bank’s presentation also stated that the restructuring would improve governance following concerns raised by regulators.
“SASBO views the manner in which this process has unfolded as unacceptable. Retrenchments are not merely a business exercise; they have profound consequences for workers,” it said.
“Any employer contemplating a process of this magnitude has a duty to engage openly, transparently, and respectfully with organised labour before information is released publicly.”
It added that workers cannot be expected to carry the consequences of failures of internal governance, decision-making, strategy, or regulatory compliance.
It said that employees should not be treated as the solution to challenges caused by executives’ negligence.
SASBO said it will examine the rationale for the proposed restructuring and insist that all reasonable alternatives to retrenchment be thoroughly explored.
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