Impact of financial crisis on bank employees

Belgian banks have been hit hard by the international financial crisis since mid 2008, resulting in all of the major banks receiving state help. As a result of the crisis, trade unions fear major job cuts in the sector in the near future and are fighting for employment protection. The government also reacted to the unfolding events by introducing a law to limit the wage bonuses of chief executive officers.

Three biggest banks hit by financial crisis

The 2008 international financial crisis hit Belgium from mid 2008 onwards. Two of the country’s largest banks – Fortis and Dexia – began to experience severe problems, which have been exacerbated by the rising financial problems of other banks around the world. The value of their stocks, as well as the stocks of most other Belgian companies, plunged. The government tried to control the situation by taking part ownership of the banks and guaranteeing their deposits.


The country’s largest financial holding, Fortis, was the first bank to face financial difficulty. Initially, a partial nationalisation was implemented on 28 September 2008. Eventually, Fortis was split into two parts: the Dutch part was nationalised, while the Belgian division was sold to the French bank BNP Paribas. The French bank took a majority stake in Fortis, while the Belgian and Luxembourg governments became minority shareholders with blocking power in exchange for shares in BNP Paribas. The deal makes BNP Paribas the biggest bank in Europe in terms of deposits. The deal does not include the main holding company, which remains in Belgian hands, covering parts of the (international) insurances activities, but also the so-called ‘bad’ loans.


On 30 September 2008, the Belgian, French and Luxembourg governments stated that they would invest €6.4 billion to keep Dexia afloat. Dexia is the second most influential bank in Belgium, specialising in loans, particularly to local governments. The three governments also promised in a further step to cover Dexia’s borrowing in the interbank market and the issue of short-term bonds for a year. ‘We have reached an agreement that stabilises Dexia, an agreement that is all the more important in the topsy-turvy world in which we are living,’ stated Jean-Luc Dehaene, the former Belgian Prime Minister who was appointed Chair of Dexia after the partial nationalisation.


KBC became the latest main Belgian bank to receive state help when the Belgian government injected €3.5 billion into the group at the end of October 2008. The authorities in Belgium moved to shore up KBC following a fall in its stock market value of 74% since the start of the year. Belgium’s Finance Minister, Didier Reynders, stated that the injection of funds was a ‘preventive measure’ designed to stave off the sort of panic which led to the break-up of Fortis and the nationalisation of Dexia. With investors fleeing banks without a firm capital base, KBC feared it would be powerless to stop the share price sliding without government support.

Trade unions fear major job cuts

The future of Fortis is of the utmost importance in Belgium, where the bank and insurance holding is the biggest private sector employer. The acquisition of Fortis by BNP Paribas was welcomed by the trade unions as the two financial institutions complement each other greatly. However, the social issues arising from the acquisition have not yet been addressed and many questions remain regarding how many jobs will be lost, particularly in areas where there is some overlap, as well as regarding what will happen to the insurance business of Fortis. These questions are of major concern to the trade unions.

The same concerns have been highlighted in relation to Dexia. It is hoped that existing collective agreements are respected and that the management of both companies enter into discussions with the trade unions to protect employment.

However, LBC-NVK, the biggest white-collar trade union in the financial services sector, has meanwhile expressed strong fears about major job cuts in the sector. Initial estimates by their representatives suggest that about 15,000 jobs will be cut in the coming years. It is hoped that this downsizing will be achieved without having to resort to dismissals but rather through the non-replacement of the large proportion of older workers who are due to retire in the next few years. The financial services sector in Belgium currently has one of the ‘oldest’ employee populations.

A positive result from the trade union side, alongside these negative events, has been the prolonging of the collective agreement on job guarantees at KBC. The agreement has been fully extended until the end of 2009 and provides job security for all employees at KBC. Nevertheless, in the meantime, this bank has also announced a recruitment freeze. Furthermore, management and workers at KBC will not receive a bonus – a form of variable pay – in 2009.

Limitation of bonuses for chief executives

The dismissal bonus for managers and administrators of companies quoted on the stock exchange will be limited to 12 months’ salary. This decision was taken by the government on 7 November 2008 under the former Prime Minister, Yves Leterme. The decision was made due to the outrage that arose over the huge severance pay recently received by some managers, including the former Chief Executive Officer (CEO) of the Fortis Group, Gilbert Mittler. The 12 months’ bonus will be based on the salary of CEOs, not on bonuses. The measure applies retroactively to all current contracts. An exception will be made in the case of managers with more than 20 years of service to a company. For this very small group of managers, the severance pay will be limited to 18 months’ salary.

Guy Van Gyes, Higher Institute of Labour Studies (HIVA), Catholic University of Leuven (KUL)

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