Banks, insurance companies lay off workers in anticipation of a difficult year

3Business can exclusively report that some banks and insurance companies have begun laying-off workers in anticipation of a difficult year for the financial services sector.

Two local banks informed some staff they will either be outsourced or laid off, according to a letter seen by 3Business.

Checks also revealed a lot of banks have served notice to staff about an impending job cut as the boards look to prune the workforce.

The downsizing is on the back of the domestic debt exchange programme which will severely hit banks, insurance and asset management companies as they hold significant portions of government securities.

3Business already projected massive redundancies in the financial sector as debt restructuring became inevitable in Ghana’s pursuit of a $3-billion bailout from the International Monetary Fund.

“We have no choice but to reduce our numbers in certain areas to help cut the cost of operations. We must be prudent with our resources looking at the mounting economic uncertainty,” a senior executive at one of the banks told 3Business’ Sani Abdul-Rahman.

It appears the domestic debt exchange will further shrink income in many core business lines of financial service providers which is making shareholders nervous about profitability in 2023.

Already the government forecasts growth to slow to 2.8% this year, one of its lowest in decades aside from the covid-induced growth of 0.5% in 2020.

Firms are already bracing for smaller returns in 2023 as government assets, which are part of their biggest source of interest income, will yield zero returns this year.

However, the job cuts have resulted in agitations between management of the banks and staff unions, with their parent national unions invited to intervene.

One of Ghana’s leading and biggest insurers has also informed its contract and some permanent staff about the termination of their appointments next month as the company looks to minimize expenditure.

The near collapse of the secondary market following consolidation of all government bonds into just four and later increased to 12, has already muted activity, causing investment companies to be redundant.

Analysts fear the debt restructuring may erode all the gains in the financial sector after the sweeping reforms of the financial sector that saw mergers and license revocation of hundreds of firms.