Clouds gathering over Suncorp

The memo put no number on the redundancy program. Sources close to management said last month the plan was to sack or redeploy 1500 people.

A spokesman for Suncorp said earlier this week that Suncorp did not have a particular figure in mind for redundancies. There was no budgeted number, he said.

The job cuts come as the company said yesterday it had sold assets to boost its capital. More on that below.

In any case, there's a gathering morale problem at Suncorp, according to a number of employee sources.

The memo applauds staff for helping to achieve cost savings. There has been no restraint, however, at the executive level and Mulcahy and his upper management have drawn criticism for travelling with their PAs in entourages, first class.

The memo in full reads:

"Good afternoon

"I've recently returned from the JPMorgan conference in Edinburgh. In addition to providing an opportunity to meet with some of our investors and to deliver a presentation about our company, it was interesting to hear the wide range of views about the continuing volatility on global investment markets. There is a lot of negativity around the world about the health of financial services.

"Since my return US financial markets have continued to worsen. The US Government's proposed Wall Street bail-out package is yet to be approved by Congress. While I believe the package will be passed, global uncertainty will continue in the meantime.

"At home, we 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. Further, our governments have pledged their support to ensuring the stability of our financial services organisations.

"That is not to say that we will be immune from further global deterioration or that things won't be challenging for our company. However, our organisation will be better able to deal with ongoing deterioration in financial markets if we continually focus on making our businesses more efficient.

"In August, we commenced a detailed review of our business units and our integration initiatives, to identify operational efficiencies and speed up our move to our end state business model.

"You will have already heard about the changes to the EGM team within your business. More changes will be announced in the coming weeks as these changes flow through to other levels of work across our organisation.

"This may create uncertainty for some people. I urge you to be patient. It will take time for the outcomes of the review to take effect. All our employees are equally important and will be treated with fairness and respect. 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.

"Your group executives and direct leaders will keep you informed about the changes you can expect to see in your areas as soon as they are able.

"While we can't control what goes on in the economy, we are doing everything in our power to react in a prudent and rational way to ensure our future success. You can contribute by continually striving to improve the service we provide to our customers 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 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.

"In these tumultuous times our customers must continue to be our top priority. Some may be feeling anxious in light of recent market volatility. We must provide reassurance and continue to be innovative in designing products and services that meet their individual needs.

"I would like to thank you again for your continued efforts as we steer our company through these very tough times.

"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.

"If you have additional questions about what is happening across our organisation at the moment, take a look at the FAQs on our group information centre on the intranet, which also links to our updated group org chart." (Memo ends)

Earlier, AAP reported that Suncorp sold its Australian and offshore equity assets contained within its $1.2 billion General Insurance Shareholder Fund portfolios.

Go to smh.com.au/businessday for Michael West's comments throughout the day.