Novo Banco preparing to dismiss 1,500 employees

The workers’ commission of Portuguese bank Novo Banco warned in parliament on Wednesday that the board is preparing further cuts to branches and the dismissal of 1,500 workers, advocating a renegotiation of the objectives with the European Commission.

The warning was given by Rui Geraldes, from the National Commission of Workers of Novo Banco, heard today in the Labour and Social Security Commission, in a hearing that had been requested in 2020.

“For 2021, due to the current pandemic situation, it will be very difficult to achieve objectives [agreed with the European Commission], with additional branch closures and the dismissal of 1,500 workers foreseen, if these are not renegotiated,” he said.

According to Rui Geraldes, Novo Banco’s restructuring plan established with the European Commission at the end of 2017, provides for the renegotiation of the objectives in the event of a force majeure contingency that is beyond the bank’s control.

“The management is going further than the objectives agreed with DGComp [the European Commission’s directorate-general for competition], as these predicted that in 2021 the bank should have 400 branches and 4,909 workers, objectives that have already been reached and exceeded in 2019,” said the representative of the National Workers’ Commission, noting that Novo Banco currently has 360 branches and 4,668 workers in the group (around 4,350 at the bank).

“These goals have to be renegotiated, taking into account that this pandemic is a fact unrelated to the bank and the bank’s management, in order to avoid this dismissal and the closure of more branches,” he said.

Asked how management justifies the need to implement further cuts, Rui Geraldes said that “very recently” Novo Banco CEO António Ramalho informed workers “that the Novo Banco of the future is being designed”.

“[This], according to him, will have to be much smaller and with fewer people, as the bank has to take into account corresponding market changes such as non-interest-bearing liabilities, i.e. low interest rates, growing digitalisation, no increase in commissions and to all this is added the covid context, which will have profound consequences for the development of the activity and consumer behaviour,” he said.

These are, according to Rui Geraldes, the reasons the board is citing to continue cutting jobs and preparing “yet another ruthless restructuring plan, which may culminate in yet another process of unfriendly terminations, or even as a collective dismissal”.

“Our perception is that unfortunately, the bank’s great concern is not with the workers, but rather with the profitability it wants to give to US shareholders, the great concern seems to be with the bank becoming an attractive bride,” he said.

The chief executive of Novo Banco, António Ramalho, has been warning that the institution will need more capital than planned for this year, given the impact of Covid-19.