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SCMP Reporter

Oversea-Chinese Banking Corp (OCBC) is taking pains to soften the blow to hundreds of employees set for retrenchment after last year's takeover of smaller rival Keppel Capital Holdings.

An OCBC spokesman confirmed yesterday that laid-off staff would be allowed to retain personal accident and life insurance cover for a year after they finish employment.

Those holding concessional loans from the bank also would continue to enjoy the discounted interest rates for a further 12 months, he said.

The limited extension of the personal benefits reflects the political and social sensitivity surrounding mass layoffs in Singapore.

Although the nation is starting to emerge from its most severe recession in almost 40 years, unemployment is expected to top 5 per cent in the coming months.

OCBC's move comes just days ahead of its full integration of Keppel Capital, which owned Keppel-TatLee Bank when the takeover was sealed last August.

This weekend, all Keppel-TatLee branches will be rebranded with OCBC signage and from Monday the businesses will become one entity.

Confirmation of the first wave of layoffs is expected to come soon afterwards. OCBC is set to report its full-year results for last year on Wednesday and it is expected to use the opportunity to release fuller details of its rationalisation plans.

The bank has declined to confirm layoff numbers, but analysts have suggested the figure could approach 1,000.

When the takeover was settled, OCBC and Keppel had a combined staff of 8,000 and a joint branch network in Singapore of 79 outlets.

Analysts point to the experience of Singapore lender DBS, which picked up the Post Office Savings Bank (POSBank) in 1998. Since then, its combined 173 branches have been cut to 107, down almost 40 per cent. Staff figures were unavailable.

OCBC executives have said they were targeting cuts of S$70 million (about HK$298 million) to S$90 million a year from the new group, or about 35 per cent of Keppel Capital's projected operating expenditure for last year.

OCBC's move may raise the pressure on United Overseas Bank (UOB), which last year bought Overseas Union Bank (OUB) and also is expected to announce hundreds of lay-offs in the coming months.

A UOB official said staff made redundant would not retain their insurance and health-cover benefits but would be allowed a six-month extension on any concessional loans.

Following the deal to buy OUB, UOB has a staff of 12,000 and 90 branches in Singapore, down three from when the OUB deal was sealed.

UOB's cost-cutting targets are considerably more aggressive than those unveiled by OCBC.

UOB officials have said they were targetting eventual savings of S$250 million a year, or 53 per cent of OUB's projected operating costs last year.

OCBC's stance pleased the Singapore Bank Officers' Association, whose president Philip Goh was quoted in newspapers yesterday saying the agreements were unprecedented.



OCBC acts to soften impact of job losses