In advance of a challenging year for the financial services industry, certain banks and insurance companies have started terminating employees, 3Business can exclusively reveal.
According to a letter viewed by 3Business, two local banks warned some employees that they will either be outsourced or laid off.
Checks also showed that many banks had informed employees of potential job cuts as the boards sought to reduce the workforce.
The domestic debt swap program, which will significantly hurt banks, insurance companies, and asset management firms since they own sizable amounts of government assets, is the cause of the reduction.
3Business had already anticipated significant job losses in the financial industry as a result of the expected debt restructuring required by Ghana’s quest for a $3 billion rescue from the International Monetary Fund.
“To help lower the cost of operations, we are compelled to reduce our headcount in some regions. Given the growing economic unpredictability, we must be careful with our resources, a top executive at one of the banks told Sani Abdul-Rahman of 3Business.
Investors are concerned about profitability in 2023 since it appears that the domestic debt exchange would further reduce income in several of the major business lines of financial service providers.
Except for the covid-induced growth of 0.5% in 2020, the government has already predicted that this year’s growth will decrease to 2.8%, one of its lowest levels in decades.
Since government assets, which make up their largest source of interest revenue, will earn zero returns in 2023, businesses are already preparing for lower returns.
However, the job losses have sparked protests between bank management and the worker unions, and their parent national unions have been requested to step in.
One of the top and largest insurers in Ghana has also informed its contract employees and a few permanent employees that their contracts will expire at the end of the month as the business strives to cut costs.After all government bonds were combined into four and then increased to 12, the secondary market almost completely collapsed, which rendered investment companies unnecessary.
Analysts worry that the debt restructuring could undo all the progress made in the financial sector since the industry underwent broad reforms that resulted in mergers and the cancellation of licenses for hundreds of companies.