L- R: Group Head, Prepaid Cards, UBA Plc Mr Esaie Diei; Managing Director, Bowen Microfinance Bank Ltd Mrs Bimpe Ogunleye; Head of Accounts, Octopus Microfinance Bank Ltd Mr Samuel Osinkolu and Product Manager, UBA Prepaid Card Merchant Business, Mrs Itohan Iyalla, at the UBA Prepaid Card Partners Forum for microfinance banks held In Lagos….at the weekend
Stunned by the gale of sack in some banks, the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) has threatened to confront managements of banks in weeks ahead, although industry watchers said the harvest of policy changes in the system has also put banks in a tight corner, reports Festus Akanbi
s money deposit banks respond to the chain of reform-induced policies rolled into the system by the Central Bank of Nigeria (CBN) this year through various forms of cost control, there are indications that the human resources of banks are the next port of call.
But the labour unions in the banking industry have drawn the battle line with any operators that seek to sacrifice its members, saying mobilisation for a large-scale industrial disharmony in the banking sector is underway.
Industry sources said more banks would opt for staff rationalisation as a cost-cutting measure in the face of the increasingly-difficult environment in which the banks operate although some operators said some banks resorted to job cuts in order to remain competitive and increase shareholders’ value in the respective institutions.
The gale of retrenchment, which commenced earlier in the year, continued up till a fortnight when management of Keystone Bank Limited dispensed with the services of a number of its employees in an exercise said to be on-going.
A source from the bank described the purge as a continuation of its recently instituted performance-based appraisal system that seeks to reward hardworking staff and disengage those whose performance falls below the satisfactory level.
The source said the exercise, which is in line with human resources best practices, seeks to make the institution nimble and more efficient, consistent with the ongoing workforce rationalisation in the banking sector.
He said management of the bank would continue to recognise performance whilst instituting best practices in human resources management that are globally acceptable for measuring underperforming workers.
A similar job cut exercise took place in Enterprise Bank Limited, another bridged bank where over 150 employees were thrown out while another set of 100 staff were penciled down for retrenchment.
Also, recently, Unity Bank Plc disengaged some of its non-performing staff; same goes for Diamond Bank, which sent off not less than 400 of its employees earlier in the year.
Stanbic IBTC laid off 250 of its staff with effect from May 1, but sources said the retrenchment at Stanbic IBTC bank cuts across all levels of the company, from management to lower level staff, in what is said to be the first batch of the disengagement exercise.
It was gathered that while some are shedding excess weight outright, others are replacing the disengaged staff with those that can add value. Union Bank of Nigeria Plc falls into this category. The lender, which recently rationalised some of its workforce, has embarked on a head-hunting exercise to bring in some of the best hands in the industry.
Industry sources said a number of other banks are also planning to weed off unproductive members of staff as the effect of the prevailing tight regulatory take toll on banks’ revenues.
“I can tell you that a number of banks are planning to reduce their workforce in a matter of weeks. Some of the recent policies of the CBN do not give room for banks to carry the burden of excess staff. We have entered into an era where bank employees have to justify their pay,” the source said.
Bank Workers’ Union Reacts
Meanwhile, the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) has vowed to resist the alleged unfair treatment meted on its members.
ASSBIFI President Sunday Salako told THISDAY last week that some of the excuses being given by banks for laying off their staff were not tenable, warning that the banking industry may soon witness a serious industrial dispute as from next week.
He disclosed that ASSBIFI had sent letters to the management of Enterprise Bank and Keystone Bank on the recent rationalisation exercise in the two institutions, warning that unless their actions were redressed, the two banks may have the workers’ union to contend with this week.
“We have sent letters to these two banks. They have no right to rationalise our staff without negotiation,” he said.
Salako said although he learnt of the retrenchment in Enterprise Bank through media reports, his association, according to him, would not fold its hands while banks, most of which posted good returns in their third quarter results, maltreat members of the ASSBIFI.
He frowned on the situation whereby workers usually become the victim of any regulatory policy. According to him, the regulatory authorities should be blamed for encouraging banks to make money without considerations for the staff.
The union leader said about five banks, among which are Guaranty Trust Bank Plc, Diamond Bank Plc and Stanbic IBTC Plc, do not allow unionism in their institutions. He said there is supposed to be a mechanism to make all the institutions compliant with labour laws.
He said the union was ready to crack down on a number of banks before the end of the year.
Recently, the CBN designated First Bank of Nigeria Limited, Guaranty Trust Bank Plc (GTBank), Zenith Bank Plc, United Bank for Africa Plc (UBA), Access Bank Plc, Skye Bank Plc, Ecobank Nigeria and Diamond Bank Plc as “too big to fail”, owing to the fact that their failure could pose a systemic risk to the banking industry and the larger economy. The eight banks alone account for 75 per cent of the banking sector in terms of earnings, profitability assets, customer deposits and branch networks.
Owing to their size and importance, THISDAY learnt that the CBN has adopted a more robust regulatory regime to monitor and scrutinise the eight banks, in order to ensure that they are healthy.
In furtherance of the objective, the central bank has asked the eight banks to increase their capital base in order to give them a buffer against internal and exogenous shocks.
The Deputy Governor (Operations), CBN, Mr. Tunde Lemo, who spoke on the development, described the financial institutions as systemically important because of their size.
Lemo pointed out that any bank that accounts for five per cent of the banking system is systemically important.
“What that means is that we have to take a closer look at them. It doesn’t mean that they are weak, it is just that we have to focus more attention on them because, God forbid, if something happens to any of them, it may affect the entire system,” Lemo said.
Good Results, Heavy Burden
Most of the banks declared positive performance in their third quarter results but analysts said the results have mixed impacts as almost all the banks recorded positive and negative performance highlights, with the increase in the Asset Management Company (AMCON) levy, Cash Reserve Ratio (CRR), cut in Commission on Turnover (COT) among some recent policies, weighing in on their earnings and profits.
The Chief Executive Officer, Stanbic IBTC Holdings, Sola Davidâ€ÂBorha, described the banking operating environment as unfriendly, assuring, however, that the bank would strive to achieve its already forecasted goals for the remaining part of the year.
“Whilst the operating environment has been difficult, particularly with a number of far-reaching regulatory changes, we remain optimistic that we will achieve our set objectives for 2013,” Ms. Davidâ€ÂBorha, said.
The Group CEO, EcoBank International, Thierry Tanoh, also highlighted the effects of Nigeria’s operating environment on the bank’s books, saying returns in Nigeria were affected by regulatory headwinds.
He said these effects were offset by greater profitability from other parts of the group, particularly in Ghana and the Central African cluster, which showed the benefit of the bank’s geographic diversification.
The Managing Director/CEO, Fidelity, Reginald Ihejiahi, said the bank had to device other means to create income, due to the negative impact of sector regulatory policies.
“The quarter ended September 30, 2013 recorded strong market volatility due to increased monetary tightening by the Central Bank of Nigeria (CBN), which took over 50 per cent of public sector deposits held by banks, without giving compensation,” Mr. Ihejiahi said. “As a result of this, our net interest margin became threatened, despite on-going pressures on activity-based income resulting from the continued CBN tariff reform.
“In the light of the sustained monetary policy tightening, we have sharpened our focus in implementing our medium term branch roll-out programme and increased recruitment of key businesses in the Small and Medium-scale Enterprises, SME, space in order to continue to build up deposits in the retail business segment, while building the business of tomorrow” he said.
The Group Managing Director designate of Access Bank Plc, Herbert Wigwe, said the impact of on-going regulatory development had affected the overall operating environment in the banking sector in 2013.
He, however, said the bank’s medium term strategy had put it in a position to cope with these industry headwinds, adding that the improved operating performance in the third quarter would provide the platform for achieving its goals in 2014 and beyond.
UBA Mobilises MFBs for Cashless Policy
By enlisting the services of microfinance banks in its quest to make its prepaid card (UBA Africard) widely accessible to the banked and the unbanked, the management of UBA may have gone a step forward to give the cashless policy of the Central Bank of Nigeria a push, writes Festus Akanbi
hen the Central Bank of Nigeria (CBN) came up with its cashless policy in 2011 and commenced a pilot of the policy in Lagos State in April 2012, the regulatory authorities had three main objectives in mind.
The drive for the development and modernisation of the payment system, was said to have been largely informed by the need to reduce the cost of banking services and drive financial inclusion by providing more efficient transaction options and greater reach; improve the effectiveness of monetary policy in managing inflation and to drive economic growth.
Officials of the apex bank have therefore continued to tell Nigerians that financial inclusion ultimately requires that consumers have multiple channels to initiate and receive electronic payments.
However, although the level of the adoption of the policy can be described as encouraging, there are indications that banks have begun to go extra mile to ensure the penetration of the policy especially among the categories of the hitherto unbanked and the grassroots.
UBA Shops for Willing MFBs
In its efforts to maximise gains of the policy, one of the frontline banks, United Bank for Africa (UBA) is reaching out to other financial institutions, especially microfinance banks, a synergy aimed at making the UBA Prepaid Card (UBA Africard) widely accessible to the banked and unbanked.
Under this arrangement, microfinance banks in the country will earn revenue for their organisations by educating customers about the UBA Prepaid Africard, and doing all the functions that come with the card such as loading card with money, card replacement, card to card transfer, pin reset etc.
Group Head, Prepaid Cards UBA Plc, Mr. Esaie Diei, who explained the nitty gritty of the arrangement with the microfinance banks in Lagos recently, said, “We feel compelled to continue to make more people in the country go cashless and that is the reason why we are having this forum which will hold all over the country to provide in-depth understanding of the UBA Africard and also present possible income opportunities for our partners. Our plan is to first extend this opportunity to our majors business partners in the financial industry to drive financial inclusion in Nigeria.”
Speaking more on the partnership, Product Manager, UBA Prepaid Card Merchant Business, Mrs. Itohan Iyalla, described a UBA Prepaid Card Partner as a businessperson who trades in UBA prepaid card issued by UBA, in order to earn revenue. All partners, Iyalla noted, will be responsible for educating customers about the card and its features, enrollment of customers, collection of information as requested for customer KYC, entering the information electronically, archiving the information for submission to UBA in line with SLA. To sign up as a Pre-Paid Card Partners, Iyalla noted, the MFB must be a limited liability company with a valid business licence operating at a permanent business premises whose business must have been in existence for at least 12 months or as may be established per country regulation. Prospective partners that meet the above requirements shall be issued UBA Pre-paid Card Partners License-No fees shall apply. Each partner will be attached to a UBA business office and all card requests will be carried out on behalf of the partners by the business offices. Cards instant cards will be issued at the partners locations by the Customer service officer of the partners after carrying out all necessary KYC.
A statement from the bank said “The UBA Visa Prepaid Card (Africard) conceived by UBA to promote branchless banking is a pre-funded and re-loadable debit naira denominated card which can be used on visa platforms and point of sale terminals around the world. Funds on the card which is not tied to any bank account can be accessed in local currencies in different countries.
The statement explained further that the UBA Visa Prepaid card works like a debit card but without need for the customer to own/operate a bank account with UBA. This is a naira denominated card that is pre-funded and reloadable.
The bank added that the card is internationally accepted in all Visa acceptance points and can be used for ATM, POS and Web transactions.
In a letter to the microfinance banks, the management of UBA stated that “In line with the Central Bank of Nigeria’s financial inclusion strategy, UBA has introduced the Prepaid Card to make banking services available to the Banked and Unbanked.
“UBA has successfully introduced the Prepaid Card in 19 African Countries. The card has been adopted by at least 20% of the populace in countries such as Burkina Faso and Cote D’Ivoire.
“With as much as 70% of Nigeria’s 160 million population unbanked, the Prepaid Card holds immense potential. It must be stated that the product has witnessed phenomenal growth within the short period of its introduction into Nigeria.
“It is against this backdrop that we are embarking on a campaign to partner with those that can drive the Prepaid Card business with UBA. Our plan is to first extend this opportunity to our majors business partners in the financial industry to drive financial inclusion in Nigeria.”
The interaction which started in Lagos on December 5, will be held in nine cities of Lagos, Ogun, Lokoja, Kano, Kaduna, Onitsha, Warri, Benin and Port Harcourt.
Use of Electronic Channels
Increasing numbers of countries have adopted policies to accelerate the use of electronic channels and reduce the use of cash. The motivations for these policies vary: many are primarily concerned with reducing tax evasion, some with fighting crime, and a few are now explicitly linked to financial inclusion –though the latter link is not necessarily immediately nor automatically achieved.
Financial market watchers said while much of the emphasis of the Cash-less policy to date has been on supply side measures-like rolling out POS devices –the low usage of POS by cardholding customers underlines the need to consider the customers’ demand for paying with cards as well as merchants’ commitment to connecting and using POS terminals.