Raiffeisen Bank restructures operations

A first time for the domestic bank market – Raiffeisen Bank is facing public protests from the union that threatens to picket the headquarters of the bank to protest against streamlining measures the management has taken lately.

The apple of discord is, on the one hand, the change in the salary payment system in the bank”s offices, and on the other hand, the merging of administrative structures to reduce costs and strengthen the sales force of the bank.

To set a direct connection between salary level and performance in sales, the management of Raiffeisen has introduced a new salary payment system: wages are no longer fixed and calculated based on how long the employee has stayed with the organisation, but include a variable component that depends on the product category and the volume of sales achieved. Therefore differences may come up in terms of income of an employee that sells credit cards for instance, which the bank deems as more important than other products and the income of another who sells term deposits or other savings products. Whereas sales performance would be rewarded with bonuses until recently, now the salary is tied to the sales made, and calculated accordingly. The Raiffeisen union says the new system leads to discrimination among employees.

Corina Vasile, the bank”s director of communication, told ZF that the management has already accepted the union”s request to have its representatives involved in setting the criteria for the evaluation, stimulation and promotion of employees.

As for administrative structures, the reoganisation of the network has led to one branch currently covering two or three counties instead of one, with some of the parallel support functions having been dropped in order to boost the sales force at lower costs.

Raiffeisen is among the banks with the highest costs on the market, spending over 73 cents to earn one euro. Steven van Groningen, the bank”s chairman, stated that one of the major goals for 2006 is to reduce the cost/revenue ratio to less than 70%.

The reorganisation of the network also entailed making 41 secretaries redundant, though most of them were reassigned to different positions, depending on their qualifications, while 15 were laid off.

The union, however, felt that the over 30 redundancies may qualify as collective lay-offs.

“It became obvious, during talks, that it was only a misunderstanding,” Corina Vasile says. According to the bank”s official, this is rather a reorganisation of the network management, where several positions have been eliminated and most of the employees filling the respective positions were transferred within the new organisational structure. Only 15 people were actually laid off. “Legally speaking, there was no need to consult with the union, since these were individual, not collective layoffs. Nonetheless, the union was informed,” Corina Vasile said.

The management of Raiffeisen had a six-hour meeting with the union leaders on Thursday, followed by another two-hour meeting on Friday. Also attending were the representatives of the Alfa cartel, to which the bank”s union is affiliated. The picketing of the headquarters should take place today. “The allegations against the Board of Directors are ungrounded, as the union leaders themselves admitted. We believe the way the union acted is incorrect and, as far as the accusations go, we reserve the right to take the proper legal steps,” Steven van Groningen, the chairman of Raiffeisen Bank Romania stated.