United Overseas Bank Ltd. (UOB) has imposed a freeze on hiring, pay and promotions as the Singapore lender prepares for a further decline in earnings following the coronavirus pandemic.
The city state’s third-largest bank told staff that it expects the situation to worsen before improving when the government cuts some of its support, according to an internal memo sent to senior staff. The hiring freeze will last until December 2021, and any exceptions will need senior approval. Salary increases and promotions will be put on hold until further notice, the memo said.
All employees “need to play their part, controlling costs and headcount,” according to the memo that was sent on behalf of HR head Dean Tong, head of strategy and transformation Federico Burgoni and Chief Financial Officer Lee Wai Fai. “We will review these dynamically as and when the situation
Given the economic uncertainty, UOB “must take a disciplined and selective approach to any new headcount increases,” Tong said in response to inquiries. The bank will continue “investing in and hiring for roles essential for our strategic priorities,” he said.
To protect “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,” Tong said.
UOB, which operates in 19 markets, including China and Hong Kong, Thailand, and Malaysia, is among global banks seeking to cut costs as the economic fallout from the virus takes its toll on business. International lenders from HSBC Holdings Plc, Credit Suisse Group AG and Wells Fargo & Co. are trimming jobs, while Singapore’s three largest banks pledged to avoid staff reductions
stemming from the pandemic.
UOB in August posted its second straight quarterly plunge in profits and another surge in bad-debt provisions. The company employs about 26,000 people across its corporate and retail businesses, as well as wealth management, commercial and private banking units.
Shares of UOB rose 0.3% on Tuesday. The stock has declined 26% this year, the worst performance among the three Singapore banks.
Like their global competitors, Singapore’s lenders are bracing for a wave of soured debts as the coronavirus crisis hammers the economy. Authorities are using both fiscal and monetary tools to provide support against a record recession that came with the pandemic. While government relief measures have supported businesses, the central bank has indicated that a debt moratorium won’t be extended.
In response to the crisis, Oversea-Chinese Banking Corp. is reviewing managers’ compensation as a way to cut costs, Chief Executive Officer Samuel Tsien said in August. DBS Group Holdings Ltd., Singapore’s largest bank, said it’s looking at its cost structure and has been cutting expenses.