Consolidation Fall Out

I am sure this topic has existed in many posts and places, but really I think we should consider both the good and bad of the Banks consolidation.

I went to Sterling Bank yesterday and had to open the door myself. But the security man opened for "rich" men. Reminded me of similar incident in a number of other banks. Wont this banks be too rich for we little spenders?

First Bank practically shuns savings account with small amount except it is salary account.

A news report said Zenith required >= 25,000 to open Savings Account.

My experience with Zenith Bank post consolidation:

I went to the gate. Met the firece policement guarding it. They asked me "what do you want". I said "I want to make enquiries about opening a bank account. THe policeman said "come here". And then he gave me the list of requirements for savings accounts and current accounts. He said I need 100,000 naira. I left. He didn't let me enter the premises at all.

Eventually, I was able to open the account by going there with a family member who is their customer. They wanted to know where my money comes from. They demanded documents from Google showing that I'm not a 419er. They asked me to write a letter to the bank explaining how I make my money. Finally they told me to deposit 20,000 naira into my new current account. I didn't have 20,000 naira. So the process of opening my [i]domiciliary account [/i]was halted. What t.f. do I need a current account for when I have no money to put there? How t.h. do I get money without my domiciliary account?

Anyway, here I am several weeks later. I have 20,000 naira in my current account. I'm still waiting for the domiciliary account. And that is why I love Charles Soludo and his consolidation policy. Now we have only one bank in this country: GTB Plc.

Do we all have to lie that we are students before "poor" men like us can open accounts.

The only bank that may still receive us "Unity Bank" - 9 mergers with 30billion, might go belly up with the current competition for "richest" bank.

There was a rumour of Zenith wanting to buy out "Union Bank", though they both denied it. Zenith is trying to raise 50billion with what they currently have, OMG. I wonder if this consolidation is really for the masses or a front for a select few. I mean, this is Nigeria.

Insurance consolidation is around the corner, very soon, you must have millions to apply for "life insurance"

I think nigeria bank/business are just terrible when it comes to customer service,

I asked my cousin to open a savings account on my behalf in his name so he went there to make enquiries, some guy gave him his personal number and told him N100,000 . I said okay he should ask how long it will take to get internet access and then convert to a domicillary ccount they guy said , why do u need internet access,u cant do anything online anyway and it doesnt work most of the time, and as for domicillary account you have to tell ur cousin (me) to come and see me yea rite like i would come just to open an account

When i was speaking with one of my friends that lives there, i asked her to enquiry for me, she said they asked for N50,000 and told her the internet acess would be after 24hrsas long as she requested for it, i sent more than the balance and up till now she's met people that work for the bank and dont even know if they have internet banking or not or they say their system is down, i called them today and they said i should send them an email,

_{why do they always ask people where they are calling from?
why do they always want u to come to their office?}


A lady i spoke to that works for STB directed my to her friend in london who tld me to pay 35,000 for the process with 10,000 credited to my account . N10,000 will be deducted monthly for internet access/mantainance, and he keeps asking me why i want a savings account instead of a current account

GTB said i should just wait till i come to nigeria b4 i open an account as its hard to trust anyone with money (okay) and the customer service person said if i call himhe will open a domicillary account for me immediate instead of the 6months, give me immediate internet access, on the same day-thats when i come down----sounds good n honest but icant wait

Professor Soludo's solution is to restrict competition in the industry. What a joke.

Now if I want to start a progressive bank to compete with these people I will need 25 billion naira. How many centuries will it take to get that kind of money, even if every business I go into turns out to be a success? There are only 2 ways to raise that kind of money: IPO and graft. Anyway, I don't care I just want my accounts to be operational, that's all.

If they like let them the 25 banks merge to form Nigeria Bank. Afterall, big is better. Nonsense.

I've been away for a long time, so I have not really followed the whole consolidation thing. But to argue from the other side, it looks to me like it makes sense to consolidate the banks in an enviroment that is as financially unstable as nigeria.

A bank makes money with investment. A bank takes your money and puts it to use by investing it locally. If a bank makes a bad investment, it needs to be able to still have enough money to repay everyone who has money in the bank.

Let me construct a hypthetical situation for you:

Imagine you put your N25.000 in a bank where people have put in an amount of maybe 300 Million Naira. Imagine that 100 Million of that money is tied up in investment that cannot easily be liquidated, for example farmland. From it's previous business, it is maybe 50 million in profit, meaning that it has perhaps 100 Million cash stored somewhere, 100 Million in hard assets and 100 Million in investment that can easily be liquidated.

In Newswatch, an article appears that claims that the chairman of the bank has embezzled 10 million Naira and fled the country.

Everyone immediately tries to withdraw their money, because they are afraid. In a week, the bank has 70 million withdrawn. It knows that it cannot pay everyone else, so it locks its doors, and prevents people from pulling money. Everyone gets afraid, the traders cannot pull money anymore, and they are afraid that they will never see their money again.

You know how nigerians are - as soon as the bank allows people to pull money, everyone will remove their money, and the bank will collapse. It cannot even liqidate its assets at a good price because it is owing money, so it will not be able to repay everyone.

You will be one of the unlucky ones, and your money will disappear.

It is easy for me to speak this way as I of course do not have that problem, but I believe that from an economical point of view, the bank consolidation makes sense.

Anything that restricts competition is bad for customers. Capitalism 101.

markesh:

I've been away for a long time, so I have not really followed the whole consolidation thing. But to argue from the other side, it looks to me like it makes sense to consolidate the banks in an enviroment that is as financially unstable as nigeria.

A bank makes money with investment. A bank takes your money and puts it to use by investing it locally. If a bank makes a bad investment, it needs to be able to still have enough money to repay everyone who has money in the bank.

Let me construct a hypthetical situation for you:

Imagine you put your N25.000 in a bank where people have put in an amount of maybe 300 Million Naira. Imagine that 100 Million of that money is tied up in investment that cannot easily be liquidated, for example farmland. From it's previous business, it is maybe 50 million in profit, meaning that it has perhaps 100 Million cash stored somewhere, 100 Million in hard assets and 100 Million in investment that can easily be liquidated.

In Newswatch, an article appears that claims that the chairman of the bank has embezzled 10 million Naira and fled the country.

Everyone immediately tries to withdraw their money, because they are afraid. In a week, the bank has 70 million withdrawn. It knows that it cannot pay everyone else, so it locks its doors, and prevents people from pulling money. Everyone gets afraid, the traders cannot pull money anymore, and they are afraid that they will never see their money again.

You know how nigerians are - as soon as the bank allows people to pull money, everyone will remove their money, and the bank will collapse. It cannot even liqidate its assets at a good price because it is owing money, so it will not be able to repay everyone.

You will be one of the unlucky ones, and your money will disappear.

It is easy for me to speak this way as I of course do not have that problem, but I believe that from an economical point of view, the bank consolidation makes sense.

Am sorry but I do not agree with your analogy. No bank in this world can survive a run( i.e all its customers coming in to demand their deposits at the same time).

Let me now explain to you why I say so. Banking is basically a form of intermediation, i.e it follows the rule of demand and supply, collect money from a depoitor like you and me, give out this money at an interest rate to a creditor as a loan. Now, if a bank collects money say N25,000 from you for 90 days at say interest rate of 15%, the bank will now go ahead and give it out to a business man as a form of overdraft for 60 days at say 17% interest. The bank makes its money from the spread of 2% between the two rates.

Now if the bank has collected over say N300million in deposits, this money is not sitting in the vault., it has gone out in to generating credit. Now imagine if all the depositors come at the same time to get their money out, the bak cannot give them simply because the money has been loaned out.

This is a simplistic view of course but that is the basic business of banking.

Now as to how easy it is to open accounts, we need to remember that we have a system that does not work. Because of the money laundering Act, NDLEA demands that all banks verify the authenticity of each potential customer. Agreed the banks carry it to the extreme but fact is in a system where you cannot verify addresses, cannot verify ID's what do you expect them to do?

In the Uk, its almost the same thing, some Banks will ask for your great grandmother b4 they open an account for you especially when they see a Green passport. Only difference here is that, once you have the correct papers you will open an account without making any deposit.

Apart from the issue raised, what about the number of people who have been forced to join the already stretched unemployment market?

Further to the above, the NDIC is supposed to protect the depositors funds. Each Bank pays % of their deposit to the NDIC as insurance premium annually yet the NDIC only protects depositors to the amount of N25,000 or is it N50,000 am not sure which is right.

If a Bank fails, the NDIC is supposed to be in a position to reimburse the depositors in which way, people will have a faith in the system

A bank is not an area where you want to go to ariaria market, and 20 Uches are shouting for you to come and deposit money in their backyard. A bank is something that has to be reliable. The economic situation of the country is in many ways dependent on the economic situations of the banks.

And about the collapse of banks when people withdraw a lot -> a bank with a lot of capital can absorb a lot of withdrawals without having to lock people out of their accounts. As such, when there is bad news, the bank functions as usual (in public perception), and so there is faith in the bank, and people put their money back. It creates a stable economic enviroment.

However, if the banking sector is such that is were wildly competitive, and banks are rising and crashing like waves on the beach, people will start moving their money out of the country to keep it safe. And you know what that does to the economy and exchange rate.

The pill that makes you healthy is bitter. Was everything good the old way? No! Things had to change, and they have. Stop complaining whenever nigeria changes, or nigeria will always stay the same.

In other words, banking business is a kind of business in which competition is unhealthy. Point noted.

Let us carry that sort of reasoning to its logical conclusion. Why don't we just merge all the banks and form one ultra-stable bank? We'll call it Nigeria Bank and the CEO will be the CBN governor. Such a bank will be really stable, right?

Well according to the CBN Governor's vision, such a bank is still too small. You see, he envisions a future in which the world's banking needs will be served by just 10-20 megabanks. I do not approve of that sort of vision.

When some of us blog about the wrongs in Nigeria, some said we aren't patriotic. E pele o, now you can see why we rant about the mess in Nigeria. Well sorry.

Soludo's idea is good but wrongly and poorly implemented. You guys ca't even open a simple account without having to sweat. Do you know many whose money is trapped in the failed banks haven't received a dime from the banks or NDIC.

If the big guns in these mega banks are smart, they will realize that 70% of the cash in Nigeria don't find their ways in to the bank vault; they are locked into the informal economy. The question is what are they doing about it? Why would a bank be selective in who banks with it? It is the one nairas that add up to become one million, right?

Nuts!

@seun, let one small bird like that give you advice lol
remove your money and run from zenith
lol sorry it is not even zenith sef, its UTB but not only does zenith have crap customer service, they do small small shady things with your dough that if you dont look carefully, one day you will open mouth and say 'ewo'
as for UTB 'hiss' thieves (not a joke)

my own bad bank experience
so i went to national bank to withdraw some money after a long useless flight from abuja (it was not 55 minutes flight oh), when i got there, of course the maiguard (not security guard phliss, maiguard) was rude. i ignored him and went inside. after waiting for a bit, i decided to answer the call of nature. only to ask around and be told that the bathrooms for customers were outside the building (biko, this was not a branch, this was their headquarters on the island), fuming i went outside to look for said bathrooms (bathrooms say so much about an institution). the foolish maiguard accosted me again and i said i was looking for the bathrooms and the pointed me in the general direction of one dilapilated building. i thot to myself tufia! how can that be the bathroom? and so i went and tried one nice wooden door like that, but it was locked so i started knocking. one irate man stepped outside and lo and behold it was a boardroom, not a bathroom. hiss. the bathroom happened to be a stall of toilets with functional? doors, sha sha the doors were not closed and some men of the nigerian army were using them in my full view
that is how i would venture to use the toilets and be raped, and no one would hear b/c of the generator roaring in the bkground
my need to pee just disappeared, if not i would have demaned to use the bathroom their CEO uses, nonsense!

How does consolidation of the banks affect customer service? Am I missing something here? Or should I ask what consolidation has to do with customer service? *Confused*

Seun do u like the way banks were in nigeria before and the way they operate , im sure u've been to banks outside the country , havent u ?

Banking shouldnt just be a nigerian thing it should be an international thing, our banks are very weak, DSP alam n could have 3 to 4 banks if they wanted to with loted money and less regulations, IM in total support of the consolidation!

LOOK AT THE LONG TERM ASPECT OF IT, I REMEMBER WHEN EVERYONE WAS SHOUTING PRIVATISATION WAS BAD, LOOK AT GSM N CO


its aint gona be easy for sometime but in da long run

lol skidoc, sorry, offtopic

How does consolidation of the banks affect customer service? Am I missing something here? Or should I ask what consolidation has to do with customer service?

If consolidation doesn't improve the customer experience in the short or long run, then what's the point?

Should "better" bank mean *prouder* bank, just because more people have lent you money.

Two years later, with the stock market is crashing and the naira also crashing, has this exercise really worked?

Seun:

Two years later, with the stock market is crashing and the naira also crashing, has this exercise really worked?

bank consolidation was not meant to keep the stock market from crashing or the naira from depreciating in the first place.

Nigeria is not immune to the global recession, plus the price of oil has dropped from $140 per barrel to around $40
per barrel.

this thread still on?