Published February 5, 2009

M'sian bank won't axe jobs but staff take pay cut

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(KUALA LUMPUR) Bumiputra-Commerce Holdings Bhd's group chief executive Nazir Razak has given an assurance that there would be no job cuts at the country's second largest bank.

'We spend too much time talking about the second stimulus cheque.' - Nazir Razak Bumiputra-Commerce CEO

'We are not looking at job cuts. It is not in our culture of doing business. In this environment (slow economy), we want to keep our people. We are looking at optimising our operations in many other ways,' he said after the company's meeting with stakeholders here on Tuesday.

'However, we asked certain staff to take a salary cut. It was voluntary but somehow or other, they are all agreed to do so.'

He said the cut was about 10 to 20 per cent in the equity section of the bank's business which includes CIMB-GK Pte Ltd, a wholly-owned subsidiary.

Asked if the group chief executive would consider a salary cut, Mr Nazir said that it would be announced at the same time as the results. 'Don't steal the thunder,' he said in jest.

Asked as to whether the recent rates cut would affect the bank's margin, he said the new deposit rates might partly cover the impact. On non-performing loans (NPLs), he said it was very much under control as Malaysian borrowers seem fairly resilient. However, he said the bank had built in a forecast of higher NPLs for 2009.

'We are fully anticipating some deterioration in asset quality. But we have not seen that even until the end of 2008.' Mr Nazir also expects a single digit loan growth or 7 per cent this year.

'Last year our loan book grew in the mid-teen, slightly higher than what we had predicted in the beginning of the year. But this year, we are predicting a much lower growth rate.'

The bank currently has about a RM30 billion (S$12.5 billion) corporate loan exposure.

On the size of the upcoming stimulus package, Mr Nazir said: 'We spend too much time talking about the second stimulus cheque. We are missing the point if we just concentrate on writing a bigger cheque.

'I don't have an estimation. This is because I don't think it is terribly important. It is up to the government to do the maths.'

According to Mr Nazir, he considered the size of the stimulus package a simpler issue when compared to pinning down the strategic framework for the country, going forward.

'It is good if given the current environment, the government comes up with a fairly comprehensive strategic plan as well as stimulus package,' he said.

On the forecast for gross domestic product, he said there would be a downward revision from the current 3 per cent projection.

'Based on what is happening now globally, we are clearly going to come up with much a downwards revised figure,' he said. Mr Nazir said the International Monetary Fund (IMF) had come up with a new forecast for the global economy, which he described as 'severe.'

On whether the new forecast includes Malaysia falling into recession, Mr Nazir said, 'at the moment, yes.' 'It is very dynamic. I don't think anyone can be so definitive on anything.'

He noted that the group's official economic research position is that there would potentially be more interest rates cut in the second half of the year, but it depends on developments. -- Bernama