Banking on Retrenchment

Sanusi Lamido Sanusi, Governor of Central Bank

The Nigerian banking sector is currently witnessing a difficult period of mass retrenchment and salary slash as a result of the ongoing reforms in the sector
By Bayo Amodu
Yemisi Aduloju, an ex-staff of Abule-Egba branch of Wema Bank Plc, Lagos, was shocked
and confused when she got to her desk and discovered that her computer system had been demobilised from accepting the password of the general network of the branch. She tried to find out what could be the problem– an undertaking which ended with the bare-faced truth: her services were no longer required by the bank. As it turned out, she was not the only one affected by this policy of the bank. Aduloju was only but one out of 300 staffers of the bank shown the way out recently.
Wema is, however, not the only bank disengaging workers for several reasons in recent times. The sack gale sweeping across the banking sector, following Central of Nigeria (CBN) Governor, Lamido Sanusi’s banking reforms, has hit several banks. Since the reforms started, Afribank had in one fell swoop sacked 700 workers, while Stanbic/IBTC laid off 400 staffers. First Bank Plc, a leading old generation bank in Nigeria on its part sacked 500 employees recently, while Union Bank Plc, one of the troubled banks, allegedly sacked more than 500 of its workers, as Spring Bank sacked about 300 staff.
The Source learnt that the criteria used in determining staff to be retrenched include appraisal report, non-performing loans by the employee and length of service. The Source also gathered that more banks are gearing up to lay off a significant number of staff. Union Bank Plc, for instance, was said to have commenced another move to lay off staff that have spent up to 33 years in its employ.
The bank, according to a reliable source, has in this wise already asked such staff to put in their retirement letters, adding that it would have to lay off a chunk of its staff otherwise it won’t make progress. “Most of the staff here are so used to the old, inefficient ways of doing things, hence they have to go,” said a source. Union Bank, it was gathered, is also set to prune down its contract staff, with no less than 300 staff to be affected.
At Oceanic, The Source learnt that things have not been the same since the erstwhile CEO, Cecilia Ibru, was sacked and arrested. The Source’s investigations revealed that though there has been no announcement concerning downsizing, some branches are already laying off employees who have disciplinary issues with the bank.
Emeka Eze, an employee of the bank in the East told The Source that some allowances enjoyed by certain cadre of workers had also been stopped. “There is no more profit sharing. Promotion has been stopped for sometime now, while our salaries are being deducted without any formal explanation. It is a terrible time for bankers,” said Eze.
The Source further learnt that the deposit target set by the bank for its staffers is a cover-up which the new management wants to expliot to reduce the workforce and cut down on expenses. The bank is said to be one of the highest paying in the industry and the new management, sources said, is finding it difficult to sustain the huge monthly wage bill given the precarious situation of the bank.
Spring Bank Plc, a bank that its former Managing Director, Charles Ojo was sacked on October 2 by the CBN has also given reasons for showing 300 staffers of the bank the exit door on Tuesday, November 10, 2009. According to an insider, the disengaged staffers cut across all cadres and from across the nation, the rationale of which is the need to remain competitive in the face of increasing overhead costs, how deposit mobilisation and the need to conserve funds ahead the December 31 common year-end for banks. The dwindling profit being recorded by the bank is said to be another reason for sacking some of its workers.
In another bank, the method of sacking workers is not a direct one. For instance, junior employees of First City Monument Bank (FCMB), The Source learnt, were all asked to resign and reapply to get fresh appointment letters. And as a role of disengagement from employment, they were promised an enhanced severance package. But rather than pay them off when the time came, The Source gathered that the bank converted their payments to investment in a pension management subsidiary of the bank, Legacy Fund Securities, contrary to their wishes.
“They promised in January that those who had worked for five years and above would get gratuities and many of us had looked forward to the money, no matter how meagre, but the story soon changed. Meanwhile, all loans and other allowances have since been stopped. What can we do as one cannot benefit from the investment until he is 50 years old?,” an employee of FCMB complained bitterly.
In fact, The Source gathered that the wave of retrenchments is driven, in the main, by cost considerations. Faced with the challenges of dwindling profitability and earnings, the management of most banks are devising means of reducing costs, especially on staff remunerations, hence the decision to retrench staff. Investigations by The Source reveal that as the banks are engrossed in sacking regular staff, they are replacing them with contract staff. Such banks it was gathered, employ companies which supply them with contract staff. Such new recruits are not the staff of the banks but staffers of the companies that recruited them. As such the companies pay them, while the banks pay the companies.
The Source further learnt that in most cases, such recruiting companies are owned by top officials of the bank or associates of a significant shareholders. Investigations reveal that the practice has become so prevalent that most banking operations’ staff of the United Bank for Africa, (UBA) are contract staff. It was gathered that what these contract staffers are paid is more than 50 per cent lower than what a regular staff doing the same job is paid. In addition to reduced wage, the banks are also free from the burden of gratuity and other emoluments they pay to regular staff.
At the moment, The Source learnt that most bank workers live with the fear of the unknown in the face of the uncertain times. While some of them fear that they could lose their jobs on account of the downsizing embarked upon by the institutions, others fear that the same fate could befall them because they cannot meet the deposit targets they were given.
Also, a lip seems to have been placed on the easy access with which bank workers secured loan facilities, with many facing the prospects of salary-cut.
Charles Onyeje, who works with one of the banks formerly listed among the top five, said that, before now, bank workers did not need to purchase most of the things they needed directly. Rather, they depended on diverse loan schemes that covered their various needs, including household items, properties and shares. “All they had to do was to pay back from their salaries. But now, the salaries are getting leaner and the loans are no longer accessible,” observed Onyeje.
The bank workers’ retrenchment and salary slash have concomittantly drawn the ire of the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), which said that it would resist the trend. The association has also threatened to cripple the activities of the banking sector, in reaction to the rampant sacking of its members since the commencement of recent reforms in the sector.
According to the President of ASSBIFI, Jarvis Eromosele at a meeting of the executive members of the union and the Minister of Labour and Productivity, Adetokunbo Kayode in Abuja recently, workers’ casaulisation, unrealistic targets for workers–including those outside marketing –had contributed to abhorrent incidents of ‘Corporate prostitution’ in the banking sector.
He added that his association is opposed to the sacking of over 1,000 bank workers without payment of severance benefits to those affected since 2006.
Eromosele also said that ASSBIFI would not hesitate to mobilise its members to the corporate headquarters of any defaulting bank in Lagos to protest such actions. The ASSBIFI leader remarked that the association was surprised that the CBN and other agencies of government could keep mum, while hapless Nigerians are being thrown into an already saturated labour market. He lamented that a particular bank with head office on the Marina, after frustrating and killing unionism in the bank, has developed penchant for retrenching workers almost twice a year– the latest involving over 400 staffers.
Senior bank officials told The Source last week that there was nothing unusual in letting staff go, pointing out that, “every system needs renewal. The people come and go. If you cannot meet targets, you get a cut and if you are consistent in failing to deliver over a period of six months, you will be asked to go,” an official of a second generation bank said.
Staffers of banks who spoke under the condition of anonymity, said many of their colleagues had to resign voluntarily when they could not cope with additional pressures due to the situation in the banks. They opined that the sector being a sensitive one is now experiencing a fragile peace as a result of this ugly developments.g