CBN to begin mass purge soon, says Soludo
- Banks' merger talks on shaky grounds
From Enitar Ugwu (Lagos), Mathias Okwe and Bukky Olajide (Bauchi)
CENTRAL Bank Governor, Prof. Charles Soludo, yesterday said that a mass purge was imminent at the apex bank as part of measures to position it as the best in Africa.
A majority of those to be laid off, according to Soludo, are those whose offices detract from the core functions of the bank and are no longer useful in the scheme of things. Also for sack are those whose departments have been scrapped and may not be useful in the new dispensation.
Affirming that the reforms in the bank were a necessity, Soludo disclosed that the apex bank had adopted a guerrilla approach to the implementation efforts because "you may not know those whose toes you are stepping on, some people will be telling you to treat it with a mind of compassion."
The bank's governor made this disclosure yesterday in Bauchi at the sixth CBN seminar for Finance Correspondents and Business Editors. The theme of this year's workshop is: "Banks Consolidation in Nigeria through Mergers and Acquisitions: Issues and Challenges".
Soludo explained that the purge is expected to peak in September next year when the full implementation of the reform project EAGLES takes firm stead. He said that the apex bank would lead in early retirements of some of the affected officials but assured that the CBN as usual would fully arm the affected officers with financial benefits necessary to enable them participate in the small and medium scale enterprises scheme in the country.
Neither him nor the bank's Director in-charge of Corporate Strategy, Mr. Walter Ahrey, who presented a paper on update of the project EAGLES, could however state how many employees would be affected.
Ahrey only listed departments and units already scrapped or lined up for rationalisation, including the printing press; staff canteen; staff bus service; facility management; plumbers; carpenters and medical services.
He restated that the bank under the project EAGLES, which is an acronym for: "Efficiency; Accountability; Goal Orientation; Leadership; Effectiveness and Staff Motivation," would be focussing only on its four statutory objectives. These are serving as adviser to the government; external reserve management; fiscal and monetary management to ensure the stability of the economic and serving as lenders of last resort to banks.
Meanwhile, the CBN Governor has frowned at the slow pace of banks to the consolidation process through their seeking to shore up their capital bases before engaging in acquisition talks. He reminded them that time was of the essence and that the apex bank would under no circumstances extend the December 2005 deadline for recapitalisation.
According to Soludo, most of the banks are doing so because they do not want to lose their identities and warned that if the practice continued, a situation would arise where there would be too many bachelors with no suitors to marry.`
He reminded them that mergers and acquisitions were just an option in the consolidation strategy and asked those willing and able to do it on their own to go ahead and capitalise so far as they do not engage in forex round-tripping or other financial scams.
Nevertheless, the scenario in commercial banks indicate that all is not well for some groups of banks that have signed Memoranda of Understanding (MoU) as a build-up to raising their capital portfolios to a minimum of N25 billion as required by the CBN.
This development, The Guardian learnt, follows the incompatibility of some of the banks. It was also learnt that owing to the haste with which such marriages were contracted, cracks have already started emerging even before the eventual consolidation.
Top bankers had earlier warned on the likelihood of such development. The Managing Director of Intercontinental Bank Plc, Mr. Erastus Akingbola, yesterday confirmed the development.
He said: "Some of the banks that signed the MoUs are divorcing behind the scenes," noting that "some banks that signed the MoU are strange bed fellows".
Akingbola made the disclosure at a media briefing on how his bank was coping with the challenges of the consolidation directive.
Executive director, Investment Banking and Financial Services of Trans International Bank Plc, Mr. Akin Oladeji had on November 26 in Lagos, said that the MoUs being entered into by some banks might not work. He stressed that the agreements were mere intentions by those banks.
Oladeji added that the speed with which the MoUs were being entered into was an indication that they might not work out well if not properly managed.
He noted that some banks were only using the MoUs to re-assure the customers of their relevance in the market.
The Managing Director and Chief Executive of Omega Bank Plc, Mr. Segun Agbetuyi, in an interview with The Guardian last week, expressed surprise "by the spate and immediacy of compliance moves through MoUs corporate weddings, the frenzy of capital market issues and private placement".
He noted that business mergers were complicated ventures even for developed economies, adding that the concerns in Nigeria were varied, given the peculiar circumstances of the environment.
Already, one of the most dreaded effects of the banks' current consolidation efforts has already begun to manifest.
The Guardian learnt that staff rationalisation is key in the MoU signed by many of the banks. In most cases, the banks engaged have agreed to shed weight, in order not to put the health of the emerging entity in jeopardy.
It is feared that most of the banks that had planned to cut their staff strength, prior to the N25 billion capitalisation directive, would carry their liabilities into the larger groups. This view was informed by the fact that it will cost such banks huge sums in severance packages for the sacked workers.
To strike a compromise, The Guardian learnt that all the workers have now been given high targets to meet, with veiled sack threats in the event of failure.
This has led some of the smaller banks that are in merger talks with bigger ones to issue performance contracts to all their staff.
For instance, some of such banks have begun deductions of up to 30 per cent from the salaries of their staff who fail to meet the targets.
As an added monitoring device, the bigger banks in most of the groups have seconded some top cadre officials to monitor their activities and especially the spending patterns of their junior partners.
Soludo had in August stated that the policy might lead to job losses in the short run. He, however, pledged that long term benefits far outweigh the initial negative effects.
Soludo had noted that it was better to sacrifice such job losses now, than to face the consequences of liquidation that many banks were heading for.
The CBN had, in its package for consolidating banks, announced plans to work with the Bankers Committee to assist the staff that would be disengaged to access the Small and Medium Scale Enterprises (SMEs) fund to set up their own business outfits and consequently create jobs and wealth.
It had equally advised that "to ameliorate the effect of possible job losses or redundancies, any staff exiting as a result of the consolidation should be compensated by the consolidated entity in line with industry standards, but not below the sustaining employment".
An official of the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) last night told The Guardian that he was unaware of the development, adding, however that "if it is happening, ASSBIFI will not be surprised".
He explained that at the onset, his association had told the CBN that the policy would lead to job losses.
He stated that even if such retrenchment policy exist, it would be by the new generation banks that were yet to be unionised.
The official explained that so far, the association's efforts to unionise such banks had not been fruitful owing to the Labour Bill before the National Assembly. He added that the banks were using the bill as an excuse to disallow their staff from joining the union.
However, he promised that labour would picket banks that will retrench, once such gets to its notice.
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