By Chris Zappone
Bendigo and Adelaide Bank is asking its employees to take 10 days in unpaid leave, sources inside the bank confirmed.
Bendigo'sThe Advertiser reported this morning that more than 5000 staff received an email asking them to consider the measure. The bank gave workers until the end of the month to decide.
The bank blamed "zero credit growth" for the need to cut hours, the reported. The mid-tier bank has been hit by eroding asset quality after acquiring Adelaide Bank in 2007 and stiff competition for customers from its Big Four rivals since the beginning of the financial crisis.The bank had given no assurances on future possible job cuts.
Bank spokesman Owen Davies blamed the weakening economy for the bank's request.
"We're still getting our share of lending but it's just flattened out,'' he said.
The bank has a network of 430 branches nationwide, with a concentration in Victoria and Queensland.
Bendigo shares jumped 22 cents, or 3.1 per cent, to close at $7.21.
''I'm not surprised they have to do this,'' said Southern Cross Equities banking analyst T.S. Lim, who said the bank was under earnings pressure, with its asset quality weighed down by the 2007 acquisition of Adelaide Bank.
''Bendigo Bank is a very good franchise but it has been diluted by Adelaide Bank," he said.
Mr Lim said Bendigo had no choice but to "shore up the bottom line in other ways".
"I think it's a tricky thing for them because they are the 'community bank' so they will alienate a few of their supporters," he said.
Yet with revenue expected to fall and loan losses rising, "it's time that they have to bite the bullet".
Earlier this month, Mike Hirst was appointed chief executive, replacing Rob Hunt, who oversaw the bank's expansion. Mr Hirst is expected to shake up the management team, which has been criticised for the bank's relationship with the Great Southern group of companies that went into receivership in May.
The bank's shares rose 43 cents, or 6.55 per cent, to $6.99 yesterday, outperforming the overall banking sector.The Financial Sector Union criticised the bank's approach to cost-cutting though the leave plan.
''We know that Bendigo along with the second-tier banks are struggling at the moment," Finance Sector Union national secretary Leon Carter said.
''You don't achieve good outcomes through a unilateral decree."
Employees, fewer than half of whom are FSU members, are being asked to make a sacrifice but there's no promise of job security in return, he said.
Mr Carter said the union was open to discussing a solution with the bank.
We want the second-tier banks to be profitable, he said.
''We understand it's tough. Let's figure out a solution that works."
Second-tier banks have seen their lending businesses wither since the global financial crisis accelerated late last year, as consumers flock to the perceived safety of the Big Four.
The impact has been to reinforce the large banks' dominance of the domestic banking market, further undercutting competition. The Big Four also have an advantage in access to less expensive wholesale funds used in loans, compared with mid-tiers, which must pay more for the same credit.
Momentum is gathering for the Senate to tackle the question of the banking industry's structure and competition, after six prominent policy economists wrote in support of such a move last week.