There are strong indications, that commercial banks across the country might defy the Federal Government’s directive to suspended the ongoing retrenchment been carried out in the sector.
It could be recalled, that Diamond Bank, as at last week fired 200 of its workforce, with First Bank concluding processes to lay off 1000 of its staff. In reaction, President Muhammadu Buhari, through the Minister of Labour and Employment, Dr, Chris Ngige, directed banks and all financial institutions to suspend the ongoing process, pending the outcome of the Conciliatory Meetings in the industry. He said, “Following the spate of petitions and complaints from stakeholders in the banking, insurance and financial institutions, I hereby direct the suspension of the ongoing retrenchment, pending the outcome of the Conciliatory Meetings in the industry”. Related: F.G Issues Fresh Directive to Nigerian Banks According to the Nation newspaper, there are about twenty Deposit Money Banks, DMBs, who have finalised plans to sack not less than 10,000 of its workforce, out of the estimated 110,000 workers, before the end of the year.
This plan action according to the banks, have become necessary, due to recent impact of trade balance deficit, recorded in the first quarter of 2016, which has begun to adversely affect the economy. The National Bureau of Statistics, NBS, had disclosed that foreign trade statistics for the first quarter of 2016, showed that merchandise trade, the sum of visible import and export goods, plunged by 38 percent, year-on-year from N4.4 trillion last year, to N2.7 trillion.
The figure according to them, represents the latest in the series of negative economic indicators, published by the Bureau in recent time. Total trade declined by N793.5 billion or 22.6 per cent on a quarter on quarter (Q-o-Q) basis, compared to N3.5 trillion in December last year, as import and export for the period, touched the lowest in 13 quarters.
Sources within the banks have disclosed that the lenders are downsizing, following rising difficult operating environment, decline in operational output of most companies, which has led to the decline in their transaction turnover, rising cost of overheads and tough policies from regulators.
The internal source added, that a large part of the workforce to be axed will come mid-tier lenders, which have been badly hit by the tough regulatory polices of the Central Bank of Nigeria, CBN, and losses incurred by overexposure to oil and gas loans. Already, Ecobank Nigeria Limited, had fired 1,040 out of its over 9,000 workers, over poor performance.
First City Monument Bank Limited, FCMB, Limited, also followed suit, with more banks expected to do the same in the coming weeks, or months. The massive workforce disengagement affected almost all cadres of the three lenders’ workforce.
News reports, have it that regulatory pressures from apex banks, including the ongoing implementation of the Zero Commission on Turnover, CoT, fees, increase in contribution to the Asset Management Corporation of Nigeria, AMCON, and Nigeria Deposit Insurance Corporation, NDIC, levies, as well as, high Cash Reserve Ratios, CRRs, are key policies depleting banks’ revenue bases.
The affected 20 commercial banks are expected to lose over N100 billion annually, to the zero COT policy; N140 billion to the AMCON levy, which has been increased from 0.3 per cent of banks’ total assets to 0.5 per cent and nearly N50 billion to the NDIC levy. Despite the government’s determination to diversify its revenue base, crude oil export have continued to account for over 70 per cent of total merchandise export in the last 12 months. Within the first quarter, petroleum and oil related items accounted for 82.8 per cent of total export, followed by raw cocoa and cocoa related items with 3.6 per cent, while other items accounted for 13.6 per cent.