As the Nigerian economy battles to wriggle out of the effect of the fall in international oil price, which has ignited a financial crisis in the country, the banking industry is already showing signs of weakness and there are fears of possible casualties.
Nobody’s job is safe in the baking industry today. Since 2015, there has been a thick cloud of economic uncertainty that stokes a choking effect on every segment of the Nigerian economy, particularly the banking sector which is one of the fulcrums of the local economy. And instead of abating, the crisis has intensified and left in its wake high rate of casualties.
In the last few months there has been massive downsizing across many banks as the industry struggles to stay afloat in an economy that seems to be spiraling out of control, defying series of intervention. And though the media have surprisingly been quiet about it, industry sources have confirmed to Waka About Africa that thousands have lost their jobs in the ensuing tremor.
But when Ecobank unceremoniously sacked 40 senior Managers recently, it was obvious that the red flag could no longer be ignored or swept under the carpet. The exercise generated frenzied conversation both in the traditional media or social media. The implication of such massive high-level downsizing could no longer be lost on discerning observers, who argued that the industry could be in a much bigger trouble than analysts have suspected. “The banking sector has been in chaos ever since, they just don’t let you know. Government fund has been their cover up. Now that it’s taken away, you can see their set back,” Nicholas Charles Chibueze, Principal Partner at SmartHub Group said.
Ecobank has since moved in to douse the tension and reject insinuations that the bank is in crisis. The bank assured that the decision was made in the best interest of the bank, as it was designed to realign its work force to achieve better efficiency. The financial institution explained that the sack was a restructuring exercise that became imperative after a review of senior staff bench strength and industry standards. It explained that the sack was necessary for the bank to realign its work force for better efficiency in line with best practices, adding that those who were affected by the exercise were adequately compensated.
But sources within the banking industry have noted that there was more to the sack than the bank has admitted. Our source hinted that that except for few of the banks, which have a formidable asset base many of the other banks are grasping for breath and some are even teetering on the brink as the financial crisis bites harder. Of course the main source of crisis in the industry, as it is for many other sectors in Nigeria is the sliding price of crude oil, which is now just over $40 per barrel, from about $120 about two years ago. This situation has significantly depleted the country’s foreign exchange reserve and led to acute scarcity of forex and a massive plunge in the value of Naira compared to dollars, leading to a financial crisis that has pushed many companies to the brink.
The downsizing at Ecobank affected Assistant General Managers and Deputy General whose monthly salaries range between N1million and N2million. But before the 40 top managers were shown the door, a long list of other junior workers have earlier been sacked as the bank struggles to survive the downtime.
Another bank that is also feeling the heat is FCMB which not too long ago shocked observers by handing out about 700 termination letters to staff, the report which as usual was under reported was a major source of worry to the industry. It will be recalled that FCMB’s third quarter operations ended in a loss that nearly wiped off the bank’s closing profit figure for the second quarter of 2015. The full year profit outlook for the bank for the 2015 operations has therefore dimmed and the earlier projected earnings figures for the bank have accordingly been revised significantly down.
Also there are reports that both FCMB and Ecobank will yet sack more as the financial squeeze gets tighter. Waka About Africa also gathered that Sterling bank has also sacked a number of its staff in an effort to cut cost. The bank also recent disengaged a number of its consultants, including media and marketing consultants. “As a matter of fact the bank has cut down its marketing communication spends by more than half,” a source said.
Recent report has also indicated that First Bank is also not immune from crisis despite being a tier one bank with several branches outside the shores of Nigeria. There are unconfirmed rumours that the banks may have also laid off some staff. One of the staff who spoke to Waka About Africa but could not confirm that the bank was in crisis. He noted that the problem started from the time of the former MD/CEO Bisi Onasanya, who stepped down recently and was replaced by Adesola Adeduntan.
Our sources noted that as a result of the financial crunch the bank has been cutting cost across board. The bank has also discontinued some of its campaign. The task before the new management of First bank is to return it back to stability.
The present gale of sack in the banking industry is coming on the back of a similar downsizing in 2015 which saw thousands of bankers join the labour market. The sack was a consequence of the implementation of the Treasury Single Account by the Mohammadu Buhari government which stripped the bank of hundreds of billion in deposit and subsequently undermined their stability.