UOB freezes wages, will limit hiring amid Covid-19 pandemic fallout

UOB will continue investing in and hiring for roles essential to its strategic priorities.
UOB will continue investing in and hiring for roles essential to its strategic priorities.ST PHOTO: SHINTARO TAY

United Overseas Bank is freezing the wages of its staff and limiting hiring amid the economic fallout from the coronavirus pandemic.

In response to media queries, UOB's head of group human resources Dean Tong said: "As we focus on protecting the livelihoods of our people, we are keeping salaries at their current levels for now and will revise our stance as the external environment improves."

Mr Tong told The Straits Times that the bank will take a "disciplined and selective approach to any new headcount increases", with new appointments to be "approved at the most senior levels".

He stressed that UOB will continue investing in and hiring for roles essential to its strategic priorities.

Mr Tong said these strategic roles include positions in areas such as technology and data analytics, as well as commercial and corporate banking.

Other banks indicated that they may take steps to keep a lid on costs.

A DBS Bank spokesman said the bank is facing significant income and credit cost headwinds as the external environment continues to be challenging.

"We have been prudent on expenses, (and this) has involved prioritising investments as well as cutting back on variable staff compensation. These measures may not be sufficient. We will calibrate any further responses in the next few months," he told ST.

OCBC Bank's head of human resource planning Jacinta Low said the bank wants to continue recognising staff's efforts, but employees also understand the need to be prudent in managing expenses and cutting costs. "As the financial year has not come to an end, we will review the compensation and rewards at a later date."

UOB has a workforce of more than 26,000 employees across the group. It operates in 19 markets, including China, Hong Kong, Thailand and Malaysia.

"Given the transformational times we are in, we remain committed to seeing our people through to better times and will continue to invest in their reskilling and upskilling. This will ensure that our people, and the bank, will emerge stronger when these difficult days are over," Mr Tong said.

In an internal memo, the bank told senior staff that it expects the situation to worsen before improving when the Government cuts some of its support, reported Bloomberg yesterday.

 
 
 

Salary increases and promotions will be put on hold until further notice, Bloomberg quoted the memo as saying. It reported that the hiring restrictions will last until December next year.

"We will review these dynamically, as and when the situation improves," the memo added. It was sent on behalf of Mr Tong, head of group strategy and transformation Federico Burgoni and group chief financial officer Lee Wai Fai, said Bloomberg.

Singapore's third-largest bank posted a 40 per cent fall in second-quarter net profit to $703 million due to weaker income and a surge in provisions set aside for the easing of loan moratoria, UOB chief executive Wee Ee Cheong said last month. This was weaker than the consensus forecast of $815 million in net income estimated by four analysts in a Bloomberg poll.

Bloomberg Intelligence banking analyst Diksha Gera said in a report yesterday that UOB's move poses risks to dividend payout this year as the lender's profits could fall more than 30 per cent.

"UOB's higher exposure to small businesses in Singapore raises its vulnerability versus peers DBS and OCBC," she wrote.

Earlier this year, local banks DBS, OCBC and UOB pledged not to cut jobs. DBS committed to hiring around 2,000 people here this year in existing and new roles, while OCBC said it would recruit 3,000 people in full-time positions, traineeships and internships.

Although it is slowing hiring, UOB told ST yesterday it is offering 320 traineeships in over 10 business and support units across the bank for its operational needs and digitalisation and innovation efforts.

A version of this article appeared in the print edition of The Straits Times on September 16, 2020, with the headline 'UOB freezes wages, will limit hiring amid pandemic fallout'. Print Edition | Subscribe