Siam Commercial Bank to save $252m from staff layoffs and branch closures

This move is part of the bank's digital 2020 SCB Vision efforts.

With Siam Commercial Bank readying itself for the digital banking era by planning to trim its 27,000 employees to 15,000 and reduce its 1,153 branches to 400 over the next three years, Maybank Kim Eng estimates the bank to only save about 20% or $252 (THB8b).

Here's more from Maybank Kim Eng:

Thai banks are normally conservative. Unless there is a crisis, they never initiate drastic changes. Therefore, this is a wow factor for us.

However, the impact on the bottom line may not be that huge. Last year, staff (THB27b) and premise (THB12b) expenses added up to THB39b or 68% of SCB’s opex. If its plan succeeds, staff expenses could be cut to THB20b. Outgoing staff should mostly be tellers in branches etc with lower salaries. But the bank would need more IT staff. These tend to command much higher salaries than those leaving. Branch closures must also be made up by more investments in IT infrastructure. Thus, we estimate that 2020 SCB Vision may only save about 20% or THB8b.

SCB is already an efficient bank with a 42% cost-income ratio, below the 44% industry average. Our estimated 20% savings could boost its after-tax profit by 13%, not as dramatic as the headlines suggest. Furthermore, our calculations assume no change in toplines, which is unrealistic given the fierce competition that digital technology is introducing to the banking industry.