Banking group Nedcor (NED) has implemented a programme of voluntary retrenchment as part of its commitment to reduce costs significantly across all levels of the organisation, the bank disclosed.

This follows the announcement of Nedcor's financial results and meetings between members of the group's executive team and trade unions SASBO and IBSA on 24 February 2004.

"Since a significant percentage of the group's expenses are staff- related, it is inevitable that we will have to reduce our total headcount," says human resources director Ivan Mzimela.

"In order to minimize forced retrenchments, we have invited staff to apply for voluntary retrenchment. Those who qualify will also be given an option of voluntary retirement," he says. According to Mzimela, the window period for applications is from 2 March until 31 March 2004. The acceptance of any applications will be totally at management's discretion.

Mzimela says the process that is being followed is intended to be fair, transparent and equitable. "We have not set any specific targets for reductions in head-count. Instead, all business unit heads have been asked to review their particular areas of responsibility with a view to addressing duplications, non-core functions and inefficiencies. In all instances, there must be a clear business rationale for the decisions that are being taken and guidelines have been provided for this purpose.

"Ultimately, we are committed to ensuring that the core business is able to function efficiently and that critical areas such as client service are not compromised by the cost-cutting exercise. We believe this is the right thing to do."

Mzimela says progress regarding the overall cost-cutting exercise will be announced at the time of Nedcor's interim results, as already indicated by Nedcor CEO Tom Boardman.

Nedcor's (NED) results for 2003 came as even a bigger shocker than most analysts had anticipated, with headline earnings plummeting from R2.5 billion just R55 million, with an attributable loss of R1.6 billion.

However, the group's parent company, London-listed financial services giant Old Mutual (OML) has come to the rescue again - underwriting a R5 billion rights issue, which Nedcor believes will provide the necessary capital injection to get back on top again.

The capital will be used partially to pay back a 2 billion loan Nedcor received in December from Old Mutual.

I-Net Bridge 09 March 2004