Family Bank Kenya Asks Employees to Go for Early Retirement

Family Bank Limited (FBL), has given its staff a two weeks’ ultimatum for those willing to go for early retirement as part of its ongoing transformation strategy.

In an internal memo to the staff the strategy entails assessment of its overall structure and resources with a focus of deploying capital efficiently to improve overall performance, “The bank is offering a Voluntary Early Retirement (VER) program to eligible employees as of October 1^st 2016.”

The offer closes on 14 October 2016.

Those eligible include: employees who are on permanent and pensionable terms and eligibility by department or job category varies for each operating unit depending on its needs.

Those who will apply for the program will be given a service pay of one month’s pay for each complete year of service, access to their pension dues in accordance with the pension rules, any outstanding staff loans shall be settled at the rates applicable under the Human Resource policy.

The downsizing comes as a result of the bank’s net profit coming down 40 per cent due to provision for loan losses that increased more than eight times results covering six months to June 30, 2016.

The provision for bad debts hit Sh299.3 million, pushed up the lender’s operating expenses by 30 per cent to Sh3.8 billion when compared to its expenses in the previous half year.

Read: Total Insurance Industry Profitability Remains Flat Year-on-Year -Cytonn Report

In the first quarter results, it posted a 32.9 per cent drop in first quarter profit to Sh344.9 million as bad loans sored by over 50 per cent. Gross non-performing loans were higher by 56 per cent totalling Sh4.32 billion from Sh2.77 billion previously.

This year, Family Bank’s sought to raise Sh4 billion through a rights issue offering shareholders additional 200 million new stock at a discounted price of Sh22 per share.

The Family Bank Growth Strategy revolves around nine factors: performance culture, customer centrism, growth in customer numbers, operational excellence and a higher quality asset portfolio. Others include systems and operational excellence, a risk management framework, strategic expansion, adequate funding and fully coordinated alternative business channels.