Banks plans sharp salary and bonus cuts during Covid-19

08-Apr-2020 Intellasia | Tri Thuc Tre | 6:02 AM Print This Post

On March 31, the Governor of the State Bank of Vietnam (SBV) issued Directive No. 02/ CT-NHNN on urgent solutions of the banking industry to strengthen prevention, combat and overcome difficulties caused by the impact of the Covid-19 pandemic.

One of the contents requested by the head of the banking industry to the system members is to proactively review and cut operating expenses, especially salaries, bonuses, timely adjust the business plans, the financial plans to reflect the real situation before the general meeting of shareholders is held. In addition, the governor asked for non-cash dividend to focus resources to sharply reduce lending rates on current loans and new loans. Following the Governor’s instructions, the banks began to have action plans.

HCM City Development Joint Stock Commercial Bank (HDBank) is the first bank in the system to send notifications to its employees about wage cuts from April 1. The adjustment starts from the April pay period until notice of replacement. Specifically, with the salary of 80 million dong per month or more will have a 25 percent cut; from 40 80 million dong, a 20 percent reduction; the salaries from 20 40 million dong will be reduced by 15 percent and the salaries of 10 20 million dong are cut by 10%. The incomes below 10 million dong will not be cut down.

Meanwhile, Saigon Hanoi Commercial Joint Stock Bank (SHB) has revised the business plan for 2020 with a minimum profit reduction of one trillion dong, reviewed all operating expenses and organised the implementation of detailed measures to reduce operating costs with a minimum reduction of 10%. The Bank’s Board of directors, Executive Boards and senior management staff voluntarily decrease their salaries by 50 percent until the pandemic is well controlled. The incomes of management level of the whole system from deputy Head of Department upwards and equivalent titles decrease from 10 percent to 30 percent depending on the level.

In addition, another bank said that the cost reduction plan had been finalised. Accordingly, senior bank leaders voluntarily reduce their salaries by 40-50%, of which the highest level cut by 50%. Only three of the bank’s lowest levels of staff are not required to make reductions. “The higher the level of personnel, the higher the cut rate, and the low-wage staff that we want to support are not affected during the pandemic” the senior bank leader shared.

According to the above leader, the salary cut is not expected, but when banks face difficulties, customers encounter difficulties, the whole economy faces crisis, they must share this tough period with banks and join hands with the community. In addition, the bank also stopped spending unnecessary items, and suspended the projects and plans that were not urgent to minimise costs.

At another medium-sized anonymous bank with headquartered in Hanoi, a senior manager of the bank said that shortly after the Lunar New Year, the pandemic would be tense. The bank’s director has directed to cut down unnecessary expenses, including some items related to marketing and promotion to reduce costs. In addition, the bank suspends the settlement of quarterly business rewards.

Our survey with several other banks, including Big4 group, they currently have no plans to cut monthly salary. However, according to the representative of some banks, the monthly salary and wages of staff members are only temporarily calculated (based on the plan of accruals and estimated expenditure) to recalculate, and will be supplemented and finalised at the end of the quarter, semi-year and end of the year to recalculate, and maybe cut accordingly.

“The current salary cut has not been notified but the situation is sure that salaries and business bonuses in the final settlement will drop sharply, not to mention that sales are seriously affected by businesses, customers and the economy crisis,” shared a human resources officer of a bank.


Category: Finance, Vietnam

Print This Post