DBS’ reply to Labour chief’s comments on retrenchment leave much to be desired

Written by Ng E-Jay
17 November 2008

DBS has responded to Labour chief Lim Swee Say’s comments on its sudden retrenchment of around 900 staff, more than half coming from Singapore and the rest from Hong Kong.

Mr Lim Swee Say had expressed disappointment in DBS’ retrenchment exercise due to the fact that the bank had not consulted with the DBS Staff Union on other alternatives to cutting costs. As a result, the perception on the ground was that DBS Bank had decided on retrenchment as a first resort. (Channel News Asia, “Labour chief disappointed with DBS’ sudden retrenchments”, 14 Nov 08)

Mr Lim had said: “It is regrettable because trust takes a long time to build but a short time to destroy.”

DBS tried to justify its retrenchment exercise by saying that the global financial turmoil had caused permanent changes to the industry, and that pay cuts, which are temporary in nature, are inappropriate to address such changes. (ST, “Decision to cut jobs taken after serious consideration”, 15 Nov 08)

On the surface, the reason given by DBS sounds reasonable, although it certainly is debatable whether pay cuts are always temporary in nature, given that many low wages workers have not seen any measurable pay increases for the past decade since the end of the Asian Financial Crisis.

However, let us not forget that DBS is involved in the High Notes 5 debacle, and there is the possibility it could be forced to make greater compensation to investors should sufficient pressure from investors and other activists groups spearheaded by Mr Tan Kin Lian causes the Government to take firmer action against the banks.

To attribute the problems to the global financial turmoil is one thing, but it is also important to realize that DBS is at fault for selling flawed structured products to investors. In other words, the mistakes made by DBS compounded the fallout from the global financial turmoil. It is thus unfair for DBS to pin everything on global events without accounting for its own errors.

It is also not that far a stretch of the imagination to think that DBS might be carrying out retrenchment in anticipation of the larger losses it might incur should it find itself being forced to grant investors more compensation for the failed investments.

The upshot of all this is that it is unreasonable for employees to be first in the line of fire and be the first ones to suffer for the mistakes made by DBS.

Hence, my opinion is that the reason given by DBS for the abrupt retrenchment of its staff leaves much to be desired.