Bank remains committed to €11m upgrade project
HSBC Bank Malta is to close six branches in the first quarter of next year, and reduce services at another branch and two agencies, as part of a drive to deliver “sustainable cost savings” in the face of what the bank expects to be “difficult market conditions” prevailing next year.
In announcing the surprise move, the bank added that the local restructuring will not entail any compulsory staff redundancies, but it noted that employees “may apply for the voluntary redundancy/ early voluntary retirement schemes currently on offer”.
The offers were drawn up after consultations with the Malta Union of Bank Employees, and they have been communicated to staff.
But despite the downsizing of its branch network, HSBC Malta says it remains committed to the €11 million project to upgraded the rest of the branch network and to further improve its automated delivery channels.
The writing had been on the wall to a certain extent at least since last month, when the bank’s interim statement had warned 2012 would be a more difficult year due to increasing pressures on revenue and capital.
And the restructuring announced on Wednesday, according to the bank, will see HSBC Malta positioning itself to ensure strong ongoing productivity and cost effectiveness – a “clear strategy will ensure that current levels of profitability and growth remain sustainable”, according to the bank.
HSBC Malta CEO Alan Richards commented, “Given the increasingly challenging economic and market conditions in Europe and in order to ensure the bank maintains current levels of performance in the medium term, the Board has recently approved a plan to deliver additional cost savings by the end of 2013.
“A key initiative is the further optimisation of the branch network footprint. This in part reflects changing customer behaviour and the increasing popularity and convenience of HSBC’s automated services.
“Malta is an important market for HSBC and while closing a branch or reducing the range of services is not popular, the decisions are only taken after very careful consideration of customer activity, demographics and proximity to other branches.
“While we will continue to provide automated services in all current locations, we will phase out six branches and reduce services at one further branch and two agencies next year. At the same time we remain committed to an ongoing €11 million investment programme to refurbish and upgrade key branches and automated facilities. Needless to say, we will do all we can to minimise any impact on customers during the transition period.”
Over the past year-and-a-half, HSBC refurbished and re-opened 10 branches in Bugibba, Hamrun, Swieqi, Paola, Valletta Premier Centre, Zejtun, Mosta, Zurrieq, San Gwann and Birkirkara. It is also installing next-generation ATMs across its network in Malta and Gozo for faster self-service transactions – an investment of more than €3 million in this new technology.
14% reduction in teller activity
Over the past year, the bank has seen a 14 per cent reduction in teller activity reflecting what the bank calls “a rapid change in customer behaviour”.
“Reliance on faster and more efficient services through internet banking, phone banking and automated services such as ATMs and deposit machines is diverting people’s dependence on being served physically within branches,” the bank explains.
“As a result of such developments, branches are being transformed into places where customers visit when they need more personalised attention and for discussions to take place in relation to planning their financial future, rather than for transactional purposes.”
This marked change in customer behaviour, in addition to the need to increase the its organisational effectiveness, seems to have led the bank to decide to close six of its branches.
By 15 February, the bank will close its branches in Msida, Santa Venera, Naxxar and Attard, while its branches in Manwel Dimech Street, Sliema and Luqa will close down on 15 March. As of 15 February, the Gozo-based agencies in Nadur and Xaghra will begin offering reduced service by appointment, and the same will apply to the branch on the university campus as from 30 June.
In a statement, the bank said the accounts held at the affected branches would be seamlessly transferred to the nearest branches. The bank said it is committed to ensuring that customers will still be able to carry out transactions via ATMs and deposit machines, which will remain in place even where branches will close down, while in some cases new ATMs and deposit machines will be installed in the locations previously used as branches or agencies.
The bank said customers that will be affected by the changes would be notified in the coming weeks by letter.