Bank Workers Welcome New Capital Base
Demand extension of transition period
By Chris Nwachuku
Amid the controversy trailing the new capital base for banks, workers in the sector have endorsed the reform policy initiated by Central Bank of Nigeria, saying that the nation would be better for it.
They however frowned on the manner in which the policy was imposed on the stakeholders without consultation. They also kicked against the transition period of 18 months for banks to comply with the CBN directive.
The CBN raised the capital base of banks from N2 billion to N25 billion last week. The objective, according to the apex bank governor, Charles Soludo, is to strengthen the banking system by encouraging mergers and acquisitions. The banks have until 31 December 2005 to meet the new figure.
The workers under the umbrella body of Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) said that if the reform was well implemented, the financial sector would be stronger and better.
ASSBIFI Secretary, Emmanuel Ilodianya, who unveiled the workers' position, said the new capital base would remove the incidents of collapsed banks and distress in the sector.
"This is a welcome development if it is well implemented. ASSBIFI endorses the new capital base. It will strengthen the banks and make them more viable. It will be difficult for banks with N25 billion capital base to fold up or run into distress. This action will obviously remove fear of customers and inject greater confidence in the sector," said Ilodianya.
The Secretary General disclosed that the problem of the country is not so much about shortage of good policies, but their implementation. He stated that if the supervisory body, the CBN, does its job diligently during the transition period without many hitches, the nation's economy might be bouyed up.
However, the bank workers flayed the manner in which the decision on the new capital base was reached as the stakeholders were not taken into confidence. According to Iloadunya, the current fears being entertained by most banks emanated from CBN's inability to collate and accommodate their views, some of which he said were genuine.
"The policy is good, but the manner in which the CBN reached the decision and announced it in public fell short of expectations. The stakeholders ought to have been consulted. For policies that affect them, their contribution should have been sought. It is not healthy to just impose such idea on them without allowing them room to prepare," said ASSBIFI chief scribe.
The bank union also kicked against the transition period given to the banks to meet the new capital base, saying it was absolutely inadequate.
Ilodianya advised the CBN to extend the period to enable banks make adequate preparations and engage in meaningful merger and acquisition talks without pressure.
"The time frame is rather short. Banks should be given enough time to work out how to generate the money needed to shore up the new base. If this is taken care of, many of the banks will survive and fears of most workers would be taken care of."
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