About 1,620 employees of listed banks in Kenya were retrenched in the past one year, a report has shown.
According to a financial report released by Cytonn Investments on Sunday, the staff were retrenched following closure of 39 bank branches across the country during the 2017 financial year.
Among the institutions which disclosed the number of employees laid off are Equity Group which led with 400 retrenchments, Barclays Bank (301), Standard Chartered Bank (300) and KCB Group (223).
Others are National Bank of Kenya (150), First Community Bank (106), Sidian Bank (108) and NIC Bank (32).
The figures could be higher given that data was unavailable from some of the banks affected.
According to the report, this measure was necessitated by a tough operating environment that was brought about by the Banking (Amendment) Act of 2015 which introduced a floor on deposit rates at 70 per cent of the Central Bank Rate and rate caps on loans at four per cent above the CBR.
In a meeting held on March 19, 2018, the Monetary Policy Committee decided to reduce the CBR to 9.5 per cent from 10 per cent.
"The focus for the banking sector in 2017 was on adjusting business models to conform to the Banking (Amendment) Act 2015. To this effect, banks took proactive measures aimed at increasing operational efficiency in response to the challenging operating environment, such as laying off staff, closure of branches, reviewing operating hours for some branches, or outright sales in the case of struggling Tier III banks," states the Cytonn report.
There has been pressure from industry players and international lenders for the law to be scrapped.
Recently after a three-week visit to Kenya, the International Monetary Fund team leader Benedict Clements, disclosed that the government had expressed its commitment to scrap the lending rate law.
However, this has drawn resistance from a section of legislators and the Consumer Federation of Kenya which say such a move will be counterproductive to Kenyans.