email:ijeomanwogwugwu@thisdayonline.com, 12.28.2009

Friday before last, I got a call informing me the UBA Banking Group had laid off all the workers - 31 in number - from its stock broking subsidiary, UBA Stock Brokers, leaving behind the managing director and two dealers. I called the bank to confirm the veracity of the story and obtain the precise number of people affected by the rationalisation exercise.

Some effort was made by its Corporate Affairs unit to respond to my enquiries, but with a different twist. I was informed that as opposed to the 31 that had been sacked, only 5 to 7 had been laid off, while twenty-something others had been redeployed to other units of the UBA Group. The reason given for the rationalization exercise was that the downturn in the stock market does not justify the retention of so many dealers by the stock broking arm of UBA.

As I was given this information, I wondered if there was a commensurate rationalisation in the number of stock broking accounts UBA Stock Brokers manages of the 17,000 it is said to have in its portfolio. I also wondered how with a staff strength of three – the MD and two dealers – the company was successfully going to manage 17,000 accounts. Since UBA was eager to down play the incident, I decided to keep the story in view pending when more information could be obtained to give it gravitas.

UBA’s stock broking arm is not the only bank or subsidiary in the country rationalizing staff and/or its unprofitable branches. Rumours abound that First Bank of Nigeria Plc has done the same. So have Intercontinental Bank Plc, Bank PHB Plc, Diamond Bank Plc, Oceanic International Bank Plc, Wema Bank Plc and Skye Bank Plc, among so many others. Where banks are not right sizing, institutions like Fidelity Bank Plc are said have slashed salaries by 20 to 30 per cent, while Finbank Plc is thinking of following suit. One or two others that once owned corporate jets used by their executives for local and intercontinental travel, have disposed of them.

GTBank Plc is another kettle of fish all together. GTB in the last few months has found itself in a position that so many banks would die for. Never known to be a bank interested in expending too much energy on retail banking, GTB in recent months has suddenly witnessed an upsurge in the number of retail customers it has to serve. The increase in its customer-base resulted from customers’ loss of confidence in the troubled banks, compelling many of them to move their accounts to banks considered safe.

However, given its previous strategy (which somehow worked for it) to focus more on corporate and high net worth customers, its IT infrastructure was never set up to support the sudden influx of thousands of new retail customers. As GTB struggles to upgrade its IT infrastructure and open new branches, it has been dogged by frequent system shut downs, making it almost impossible for customers to use their ATM cards to pay for transactions, withdraw cash from other bank ATMs on the Interswitch network, and even in some instances, withdraw from ATMs belonging to GTB. The bank’s customers are now compelled to wait on long queues reminiscent of the tally number-era of 70s and 80s before they can withdraw cash from their accounts; that is where they are fortunate not to be informed by GTB tellers that their accounts cannot be accessed for the day.



Yet, not one of these banks has been sensible enough to inform the public and their customers of the measures being taken by the institutions to cut costs. Neither has GTB apologised for the inconvenience suffered by its customers or attempted to explain away the long, suffocating queues at its branches. In fact, Intercontinental was only forced to issue a statement two Saturday’s ago after The Guardian newspaper that same day published a story not officially confirmed by the bank that it had laid off 1,500 workers. So was Oceanic Bank shortly afterwards. A few weeks earlier, Intercontinental was also compelled to offer some jaundiced explanation on why it granted a N31 billion loan waiver to high net worth customers only after the story broke in the press.

Even worse, the guerilla tactics being employed by some of the banks is reflective of how uncivil and uncouth the business culture is in Nigeria. When dispensing sack letters to staff, some banks are said to have sought the assistance of the Nigerian Police Force to deploy units of gun-totting policemen to their premises in order to avert the likelihood of protests or fracas that may arise from the sacks.

Some don’t even have the decency to pay full disengagement entitlements when firing their staff. In several instances, disengaged staff are not given cogent reasons in the sack letters as to why they being let off. In effect, there are no clear cut criteria how some banks determine who should be let go and those to be left behind.


This is not good enough. The new era being championed by Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria, with the support of the media and generality of the public, is one anchored on tighter credit controls, improved risk management, enhanced corporate governance structures, and greater transparency.

That ten out of 24 banks are tottering on the brink is because they were opaque and downright dishonest. As a matter fact, the losses being declared by almost all the banks (including those that escaped the CBN hammer) is indicative that all the banks have not been forthright with their accounts.

Until the CBN compelled them to start making write downs on the non-performing loans on their books, they were declaring spurious paper profits. Granted that there is a general consensus in the financial system that the CBN has to provide an unambiguous framework on lending and prudential guidelines, the massive write downs by the banks would not have happened if a new helmsman had not taken over at the CBN and forced them to bite the bullet. It would have been business as usual.

But it is high time bankers begin to get it into their system that it is no longer business as usual. Banking, in principle, is hinged on trust. When a bank asks customers to put their savings with them, the bank is explicitly asking that prospective depositors trust it to manage their savings responsibly and that it will keep them abreast of developments in the institution.

Added to this, all but three banks in this country are public companies quoted on the Nigerian Stock Exchange, implying that banks are not just accountable to depositors but also to millions of shareholders that need to know that their investments are managed prudently. This means that banks are expected to be very open about their operations.


When banks allow the media to speculate about their operations and instruct their Corporate Affairs managers to go round media houses to suppress stories, they activate the rumour mill and are not doing themselves any favours. They are effectively demarketing themselves. Staff rationalization exercises are very unpopular but are sometimes unavoidable during economic downturns and in situations when institutions have been greedy and reckless, as was the case in Nigeria and the Western world. Stories that could have been properly managed by the institutions are left to disenfranchised staff who have been sacked to disseminate. If the stories are embellished by such staff, the banks have no one else to blame but themselves.


Personally, I am sick and tired of being called by Corporate Affairs units not to name banks whose branches have been robbed, or not to publish stories when fraud perpetuated by crooked staff has been uncovered, or look the other way when salaries have been slashed and workers retrenched. When I call a bank to confirm a story, I want to be told the truth and not a convoluted version of the truth.

As a journalist and bank customer, I am doing myself and millions of customers and shareholders a disservice by concealing information which ordinarily should be out there. Fraud, closure of branches, sacking staff, etc, are some of the glitches banks have to contend with, even when self-inflicted. By being transparent about the downside of business and measures being put in place to safeguard against their recurrence, banks would earn the trust of the public.


Banks must start educating customers and the public better. Bank robberies are no fault of theirs, and the banking public must be informed that efforts are being made to make branches safer and that deposits are insured against losses that may arise from robberies and fire. Even cost cutting measures and other survival strategies have to be adopted by institutions when they incur huge losses as is the case today. However, reluctance by the banks to improve transparency would simply mean nothing has changed

A nice piece from Ijeoma there.