Published November 26, 2008

DBS bonuses set to drop sharply

But no change in monthly salaries, so that junior staff don't face hardship

By CONRAD TAN

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(SINGAPORE) DBS Group's top managers and other staff will take home less pay this year due to lower bonuses, but their basic pay has not been cut, said the bank yesterday.

'As of now, there has been no change in monthly salaries,' DBS spokeswoman Karen Ngui said in response to BT's queries.

But variable year-end bonuses for 2008 will be 'significantly lower than that paid out in previous years', given the global economic turmoil, she added.

Since the variable bonus makes up a much larger proportion of senior managers' total pay for the year compared to more junior staff, the top managers will suffer the biggest drop in pay, Ms Ngui said.

But DBS's junior staff will also receive a lower year-end bonus, which is why the bank decided against cutting employees' basic pay, she added.

'With the reduced bonus payouts this year, we are concerned that it would be more difficult to make ends meet for our junior staff if their fixed monthly wage component was also reduced.'

On Nov 7, the bank said it would slash 6 per cent of its workforce or some 900 jobs by the end of the month, with slightly over half the job losses in Singapore.

Here, the axe fell most heavily on the upper ranks - 16 per cent of senior staff were cut compared to 3.5 per cent of junior staff, Ms Ngui said.

'After considering the number of staff affected, we felt it was crucial that the remaining 96.5 per cent of our junior staff's fixed monthly wages are kept intact.'

BT understands that OCBC Bank has no plans at present to cut staff pay. United Overseas Bank declined to comment.

DBS, which has been criticised for cutting hundreds of jobs instead of reducing salaries, has been keen to stress that it is firing staff not just to save costs but to make itself leaner and more efficient.

'The decision to let go our staff was not an easy one, but it is necessary for us as we build a stronger and fitter organisation. We are intent on not having to take any other measures that will impact our staff,' said Ms Ngui.

DBS's staff expenses already fell steeply before the job cuts were announced. Staff costs for the group for the three months to end-September totalled $188 million - 49 per cent lower than in the previous three months and down 46 per cent from a year earlier. Last year, the group's total staff expenses reached $1.38 billion, up 11 per cent from 2006.

Banks worldwide are firing staff in a desperate bid to slash costs as the world's biggest economies slide into recession, raising fears of collapsing revenue and losses from soaring bad debts.

Last week, Citigroup said it would reduce its staff to 300,000 by next year from 352,000 at the end of September.