Suncorp job losses imminent

The chief executive of Suncorp, John Mulcahy, has sent a memo to staff advising of job losses to come.

Suncorp is currently undergoing significant changes in both its management team and broader staff situation as it restructures its retail business and banking operations after reporting a profit reduction in the last financial year. A communication sent yesterday from Mulcahy confirmed that job losses are imminent. The information first appeared in other reports and Money Management sought confirmation as to the authenticity of the memo on which they were based.

Mulcahy acknowledged that times were challenging for the group, saying the company could better deal with the deterioration in financial markets with a “focus on making our businesses more efficient”.

Money Management reported the changes to the executive level of Suncorp in recent weeks as well as flagging the job losses. Mulcahy said “more changes will be announced in the coming weeks as these changes flow through to other levels of work across our organisation”.

He said while this may “create uncertainty for some people”, he urged staff members to be patient.

“All our employees are equally important and will be treated with fairness and respect,” the memo said.

“As always we will seek to manage job reductions through natural attrition. However, those people whose roles are made redundant will be strongly supported through the redeployment and redundancy process.”

A spokesperson for Suncorp said there was no figure on the number of redundancies.

Mulcahy said the group is “doing everything in our power to react in a prudent and rational way” to the current financial turmoil to “ensure our future success”.

Mulcahy urged staff members to contribute by continually improving customer service and “by helping us to control costs”.

“So far your efforts to quickly reduce discretionary spending have resulted in significant savings from each business unit. Since July we have seen a 33 per cent drop in travel related costs as people increasingly make use of tele/video conference facilities. This is a good outcome and I offer my sincere thanks. Please continue your efforts,” the memo said.

“By taking action now we are taking the necessary steps to ensure the health of the Suncorp Group well into the future and ensuring we continue on our path towards becoming the most admired financial services organisation in Australia and New Zealand.”

Mulcahy had just returned from a JP Morgan Conference in Edinburgh, saying “there is a lot of negativity around the world about the health of financial services”.

He said Australians should be “comforted by the fact that the Australian and New Zealand financial services industries are two of the most robust, well regulated and well capitalised across the globe”.

This is unlikely to be of much comfort to those soon to be former employees of Suncorp.

Yesterday, Suncorp also announced that it had completed the disposal of the Australian and offshore equity assets contained within its General Insurance Shareholder Fund portfolios. The decision to “de-risk” the investment portfolios was a response to recent regulatory changes requiring additional capital to be held against equity investments, a statement from the group said.

Suncorp said the portfolios were valued at approximately $1.2 billion on June 30, 2008, and that the sell-down completed “prior to this week’s equity market volatility” at an average ASX 200 index level of around 4,945.

The group said the proceeds of the equity disposal are now primarily invested in cash.