Kiwibank to shed 80 staff in restructuring
Kiwibank has confirmed 80 staff will lose their jobs in a major restructuring aimed at cutting costs.
The state-owned bank has spent months planning an overhaul which will attempt to combat persistently high expenses, limited capital, and intense competition.
Last night the bank confirmed to BusinessDay it was currently rolling out the new structure to staff, with about 80 positions expected to be axed.
That represents over 7 per cent of its current workforce of 1100, most of whom are based in Wellington.
Many more staff will lose their current jobs, but will be invited to reapply for more than 120 newly created roles.
Kiwibank communications manager Bruce Thompson said the bank needed to meet the challenges of a highly competitive market.
"What was decided at board and senior management level was we needed to consider our structure, and make changes," he said.
"We need to take steps to reduce our costs, and therefore increase our profits."
Thompson said there was still some consultation to go through, and individual staff would not yet know their fate.
He would not say which of the bank's business divisions were specifically being cut.
"I don't particularly want to identify an individual area. It goes across all aspects of the operation of the bank."
Kiwibank has not paid a dividend since being founded in May 2001.
It is infamous in financial analyst circles for having much higher expenses than its competitors.
In the most recently reported March quarter, Kiwibank's cost-to-income ratio was 73 per cent.
That was almost double the average 40 per cent of major rivals, including ANZ, ASB, BNZ, TSB and Westpac.
The worst of those was TSB, which is smaller and locally-owned like Kiwibank, but still had a ratio of just 42 per cent.
Kiwibank's costs as a proportion of its total assets were 2.2 per cent, again almost double the 1.15 per cent average of its peers.
Thompson said the higher costs were partly due to the relatively young bank still being in a growth phase.
"We're now in a different phase in the development of the company," he said.
"We have to take action, and we are."
Massey University banking expert David Tripe said while Kiwibank struggled with high expenses, it also had important developmental tasks to undertake.
"I can understand them being concerned about headcount and overall cost," he said.
However, Tripe said the wisdom of the restructuring would depend on exactly where the cuts were taking place.
"Of course, every re-organisation improves a company's performance- we always get told that, don't we," he said.
"It could be that's the actual outcome."
Kiwibank has previously announced about 100 banking jobs will go from Wellington as it establishes a back-up head office in Hastings.
The bank announced in March that "contingency planning" signalled the need for a large office outside Wellington to take over in the case of a disaster, such as an earthquake.
The Hastings move is unrelated to the imminent restructuring.