CEC embarks on much-needed restructuring programme

Increased pressure from the international financial institutions, such as the World Bank, but also fiercer competition in the banking system have prompted the Romanian Savings Bank (CEC) to embark on a drastic cleaning and restructuring programme in order to survive on the market.
CEC is an institution where nothing has changed in the past decade. Except for the management.
The lack of restructuring has put the Savings Bank in a precarious situation. The financial institution needs downsizing, while many branches post no profit.
The IT system is “a mess,” with most operations done manually, while the portfolio of products and services fails to live up to market demands.
Until 2001, no one brought this issue up, although CEC manages 30-40% of the population’s banking savings. However, starting last year, both the European Commission and the World Bank have repeatedly pushed for a rapid start of the restructuring process at CEC. Thus, willy-nilly, the Savings Bank proceeded to serious cleaning: change of the personnel structure and of the people managing various departments, extensive cleaning of the product and service portfolio, but also closed subsidiaries and massive layoffs.
After more than 700 CEC employees were let go in 2002 and 70 unprofitable branches or agencies were closed down, this year may be even tougher: about 10 percent of all employees (more than 1,000 people) will have to start looking for a job, while another 200 agencies will be closed.
“In 2001, when I came to CEC, I drafted a restructuring programme, aimed to increase efficiency, which was endorsed by the World Bank, the European Commission, the Finance Ministry (the bank’s main shareholder, i.e.), but also by the National Bank. Whenever we fail to fit into the programme, we try to increase revenues but also to cut expenses. These are the best methods: cut personnel-related costs and the expenses with unprofitable branches or agencies,” Constantin Teculescu, CEC chairman told Ziarul Financiar.
According to Teculescu, some of the dismissed employees may be transferred to the new companies CEC is planning to establish: a leasing company, a securities company and a bank.
2002 was not a very good year for the Savings Bank. Gross profit amounted to 250bn ROL (some 8m euros), down since 2001, when the company grossed 900bn ROL (about 30m euros).