The Novo Banco restructuring plan under chief executive Stock da Cunha (pictured) has started, with around 1,000 staff scheduled to lose their jobs.
The number is not finalised and, for reasons best known to eurocrats, the restructuring plan has to be approved by Brussels which is against job losses in the banking sector.
Stock de Cunha wants to trim the head count from 7,572 employees (6,175 in Portugal and 812 overseas) with an objective of running the bank with under 6,000 employees in Portugal.
It therefore looks like Novo Banco wants to lose just over 175 staff in Portugal with the rest of the lay-offs coming from selling or closing overseas operations.
In addition to submitting the great plan to Brussels, the Stock da Cunha team has to discuss staff reductions with Portugal's unions.
The bank is keen to state that the restructuring plan already was in motion before the ECB stress test showed Novo Banco was €1.4 billion short of financial health. The plan may have started but its results have been invisible, apart from a series of press releases indicating future asset sales after Novo Banco failed to attract a buyer.
In the first six months of the year, Novo Banco managed to make a loss of €251.9 million despite having all the juicy bits handed to it from ‘bad bank’ BES.
Stock da Cunha has been slow in wielding a long overdue axe as between January and May, the bank closed five branches in Portugal, leaving 626 outlets.
"The main objective of reducing the number of workers and branches is to generate savings in personnel costs and operational expenses," according to today's limp announcement.
This is all "an effort that started when Stock da Cunha took the top job at the bank in September 2014, but one that will have to be more ambitious,” according to today’s Jornal de Negócios.
Other banks have had no great problem in cutting staff. Nuno Amado at BCP has 9,959 at the end of 2011 and now has 7,555 employees, losing the balance through friendly termination programmes and early retirement.
The various unions representing Novo Banco workers met in September to discuss the staff situation in a committee that included representatives from the National Union of Bank Technicians (SNQTB), Southern and Islands Bank Employees Union (SBSI), the Northern Bank Workers Union (SBN) and the Union of Financial Workers (SINTAF).
The committee reported that "levels of anxiety and fear increase day by day, thereby causing a great physical and psychological strain on all workers."
The unions spared no ire at the Bank of Portugal governor Carlos Costa and were concerned at his incompetece during the Novo Banco sale process, "Costa has never showed any concern for the 5,660 (union members) of Novo Banco or other employees in the group."
The union representatives concluded that "whatever the solution found for the future of Novo Banco, all jobs should be safeguarded as should social peace and the pension fund."
This clearly is not going to happen and the restructuring of the bank, which should have started in 2014, is under-powered and overdue.
