•Recall funds from rivals.

The race for financial year end harmonization of accounts by banks is breeding disquiet in the industry as banks, particularly, first generation ones, considered more liquid have commenced recalling of funds from less liquid ones at the interbank market. 

BusinessDay gathered that the situation is so bad that most banks are struggling for survival even as their vaults are fast depleting. Consequently, banks, mostly big and active participants at the interbank market, have not only resorted to holding unto funds preparatory to the year-end requirement, but are recalling the funds outside their vaults.

The situation has led to increase in the cost of funds as 7-day tenured funds climbed to seven percent as against 6.790 percent the previous day.
Lending, which is virtually non-existent now has gone to about 23 percent, as against 19 last week at least on paper, an indication of further financial squeeze, with its attendant negative impact on the economy.

In fact, our investigations have revealed that while some banks have gone back to the drawing board with the intention of increasing the number of staff earlier scheduled for sack, others are contemplating merging of branches as viable options to withstand the challenges of the times. Most staff that spoke with BusinessDay said yesterday that they are living on daily basis as anything can happen anytime. The development, analysts said yesterday, is capable of further eroding confidence in the industry.

It was gathered yesterday that resort to trimming of the workforce by banks is not as a result of the need to meet the year end requirement, but also, as a result of advice by some foreign consultants employed by these banks.

Besides, the collapsing of branches may not be unconnected with the fact that most of them have become loss centers, as their opening may have been informed less by business considerations but by the bid to create false impression of being among banks with larger number of branches, and hence among the leading players in the industry.

Mostly affected are the troubled banks, which currently depend on government securities for trading as the only survival option. The managing director of a first generation bank, whose management was sacked by Central Bank of Nigeria (CBN) during the first round of the audit report is having a running battle with the staff following a directive that staff should have undated letters of resignation as any of them could be called upon anytime to resign.

But some analysts said yesterday that CBN should rather guarantee interbank transactions to engender confidence and patronage. Those opposed to the take off of the policy in December, however, argued that, apart from regarding it as one reform too many, considering the uncertainty pervading in the industry, it could lead to aggressive and unhealthy marketing, capable of undermining the reforms by CBN.

Sanusi Lamido Sanusi, CBN governor, in response to BusinessDay inquiry two weeks ago said that the December deadline is sacrosanct, saying “there is no truth to the rumour [of extension], no going back on year end”.

Anthony Owuye, an analyst, was of the opinion that CBN should in the interim guarantee interbank placement so as to engender confidence in the industry, adding that banks would sort out themselves out when the policy takes full effect from next year.

Wale Abe, chief executive of Financial Market Dealers Association of Nigeria (FMDA), said banks are shedding weight to make their management more efficient, adding that it is one of the available options of ensuring they deliver on their promises. He said the slim-fitting will help arrange a smooth process of operation while at the same time engender a balanced payment and favourable trade position

According to a financial advisory expert who pleaded anonymity, “most of these banks’ actions regarding staff shedding and branches collapse may not be related to year end pressure only because some of them claim they have introduced new technologies. It could be the outcome of some foreign consultants’ advice rendered to some of these banks. “Some of them I know very well, have engaged foreign consulting firms, who are advising them on the way out of the current crisis.

http://www.businessdayonline.com/index.php?option=com_content&view=article&id=6202:bank-common-year-end-branch-closures-loom&catid=1:latest-news&Itemid=18

Sanusi Lamido Sanusi.

lol, lets keep watching

nna na wa O. wot does tommorow hold?

Nobody knows. In God we trust.

There is no wrong with the way Lamido Sanusi is going.
I just pray that his actions will not be coupled with some
intension to victimize any body selfish reasons.
This country go better.

Good move. Many of these bank branches are unnecessary in the 1st place. Some banks even have 2 branches on the same street, a stone throw from each other.

ehnnnnn, Abeg oooo, this should not affect my town ooooo.i have many friends working in bad.I believe this will cause UNEMPLOYMENT, God help us

I still wonder why a bank will have two branches on the same street in my area

Wahalla Dey!!

Naija economy is shrinking fast.

I see danger.

This is something that should have been done lon time ago. in nigeria of today just on 1 street alone you will see like 3branches of the same bank. most nigerian banks just keep opening branches and expanding at ridiculous rate not paying attention to the main ethics of banking because they believe opening more branches means more customers not taking into consideration other aspects. now they are going to be closing branches which in turns means making people jobless an issue that would have happened in the first place if they had reasoned well.

Before C C Soludo, we have so many cowboy bank MDs with head office in VI and one or two branches in some state capital just to show awareness and these banks were doing fine but they are highly volatile to any shrink in the economy in which they can easily closed shop and NDIC and NPF will take charge with poor people fund going down the well. Soludo came with socalled 25 Mega banks, opening branches like RCCG, so many people were employed direct and contract staffers working around the streets making sure that all the money in circulation pass through the banking system for proper economy growth
With such good reform all the banks were healthy having enough fund to employ Nigerians paying good salary to fortunate guys. The kill joy bank MDs went ahead to lend the money mopped from the streets to the borgeiose oppresing us.

SLS says no way, the impact is still on us.

Now our nairalanders bankers are panicking about their secured job.

God help us

kai he don happen, wahala brekete for boys

puskin:

Naija economy is shrinking fast.

how does shutting unprofitable branches that were opened in the first place either to respond to political reasoning or in typical 'my benz is bigger than yours' ego tripping mean a fast shrinking of the economy?

most banks are surviving on inter-bank lending and leaving above their means.
all these must stop.

at least cost of property will come down

They should not close branches outside Lagos, Abuja. Most banks have over 100 branches in Lagos only including the so-called distressed banks. Wetin! Wen na only 400 or so number of branches they have nationwide.

Funny as many of us think on NL as we do not relate things with the economy
D impact r too numerous dan one can think from GROSS UNEMPLOYMENT, HIGH RATE OF CRIME, INCREASED INFLATION, COLLAPSED ECONOMY SINCE THE SECTOR HAS NEVER BEEN EFFECIENT. The solutn 2 d current crises can only b resolved by d CBN. While wat Sanusi is currently doing should av bin done long ago by Soludo by ensuring dis den MEGA BANKS supported real sector growth, it is quite saddening dat Sanusi is takin dis measure witout providin a mechanism for wat he is doin. Banks no longer give credit i.e. no more financial intermediation which is dir major function n we r saying d economy is not shrinking. For me, d Interbank market is not even d problem because it doesn't in anyway improve d economy.
Sanusi n his ad - hoc team shd pls luk into dis wit d view of resolving same.

God is in control

kaypinchi:

I see danger.

, danger wahala dey!

[size=14pt]un-employment(s) O.M.G[/size], pity those affected banks and bankers,

Banks are in the business of advancing funds to businesses for interest. That is how the most banks make their profit. Closing branches, retrenchment, etc may be responses needed to deal with the situation. But lets not take an alarmist view of the situation.

Some banks may need to do that to survive (lose some staff and save the job of others). It is pragmatism. It does not necessarily spell doom for the country or the economy. We are approaching November. By January, Banks that have successfully recalled the loans, advances, and and funds with other banks will be awashed with funds. Banks don't like idle funds! To improve on their previous performances, they will need to advance credit as soon as their books are balanced. The real sector and other areas of the economy will definitely benefit from it. This is the credit cycle of most banks - Sanusi just made it tighter!

So I do not buy this doomsday scenario. There is no serious cause for alarms.

Helo, labour market!! warm up to receive many more reluctant visitors very soon. The smart ones will put on their thinking caps now. Few words are enough for the wise.     

May God save us from all the impending danger.

Nezan:

May God save us from all the impending danger.

omo see danger, wahahla dey!!

@Holesher and dexlomo i agree totally with the two of you.

God bless NIgeria.

If not 4unemployment reasons,some branches are better shutdown.D so-called banks ve failed woefully because they ve not been able to achieve their existence- givin loans 2those with great ideas but were busy lounging with people`s contributions

.  .  . when one door closes, others open .  .  .

i recollect d last time i was in the country,my dad,uncle and i were avin a discussing on naija's business enviroment n d financial sector,dey both raised(they were both bankers) serious concern about the way alot of these banks amongst other things were opening huge branches everywhere.stuffs happening now where alot of what they postulated was gonna happen.really got some profound insight into the way the financial sector runs.got wiser for it.

no thinking, only collecting fat money and vacationing abroad-God is in control.Na d talk from 9ja ALWAYS

What do you guys make of this? Sanusi is really hitting all these banks hard!

Skye Bank set to release FY 09 results

Skye Bank's results (for the 12 months that ended September 2009) are about to be released.

Highlights from the income statement

Gross Earnings
2009: 101.4 billion
2008: 74.6 billion
Growth: 36%

PBT
2009: 19.5 billion
2008: 20.4 billion
Growth: -4%

All together a good performance for top line figures, though the CBN has mandated extra provisioning of 32 billion,

Thats definitely bad news!
I really hope the unemployment wont be too bad
There are so many Nigerian families dependent on bankers now, many siblings in school,mothers in the Village etc
As much as i support bringing sanity into the sector, there should be a plan for very soft landing for those who might be asked to leave, we all know there are too many branches of some banks really, i remember seeing about a dozen branches of the same bank on the same street in Victoria island sometimes earlier in the year.
Whatever the case, we shouldnt make nigeria worse off after the clean up.