The City Bank Limited has slashed the salaries of its employees by 10 percent to offset the losses caused by the novel coronavirus outbreak.
These pay cuts will be effective from June 1 this year and last till December 31, 2021.
Additionally, officials of the bank will not get annual increments or performance bonuses next year, Mashrur Arefin, managing director and CEO of the bank, said while announcing the pay cuts on Thursday.
He told The Business Standard that only the salaries of employees earning more than Tk30,000 per month have been reduced.
Of the 6,000 employees of the bank, 5,000 have had their salaries reduced.
"The bank's income has decreased by Tk390 crore. We are now cutting costs in a variety of ways. Salaries have been reduced so that no one loses jobs," Arefin added.
In response to why they took such a decision at this moment, the managing director said, "If such a decision is not taken now, the bank will lose a lot more later."
The City Bank made an operating profit of Tk640 crore in 2019. The profit target for 2020 has been set at Tk550 crore.
In the last five months, it made a profit of Tk235 crore. The bank's profit after tax in the first quarter stood at Tk91 crore.
Meanwhile, announcement of the pay cuts has caused dissatisfaction among employees of the bank.
An official wishing to remain unnamed said the bank was cutting the salaries of its employees to make up for the losses incurred by issuing loans at single-digit interest rates.
In this regard, Arefin said, "Due to the novel coronavirus, we have not been able to collect any of our loan instalments for the last three months. Our income has also come down as a result of the 9 percent interest on loans. Credit card customers are not paying their bills either."
Back in May, AB Bank also decided to cut the salaries of its employees. However, that lasted for only two months.
The bank deducted up to 3 percent salaries from the principal officers, and 5 percent salaries from senior principal officers up to the managing director.