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Stay off Troubled Banks, Labour Warns Investors

Category: Investors NewsBeat


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Stay off Troubled Banks, Labour Warns Investors


Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) has warned local and foreign investors who have indicated interest in acquiring the rescued banks to halt further negotiations with the Central Bank of Nigeria (CBN) in order to avert an industrial crisis.


The rescued banks, referred to as R8, are the eight banks the CBN intervened in by sacking their executive management and injecting fresh N620 billion tier two capital following the joint CBN /NDIC examination results of August 14 and October 2, 2009. They are Union Bank, Afribank, Intercontinental Bank, Oceanic Bank, FinBank, BankPHB, Spring Bank and Equitorial Trust Bank. Wema Bank management was not changed but asked to recapitalise.


The union yesterday also wrote CBN Governor Sanusi Lamido Sanusi, informing him of a looming industrial crisis in the sector should management of most of these banks not reverse their recent action that has culminated in the sack of thousands of their workforce. Acting President of ASSBIFI, Mr. Sunday Salako, who made these known yesterday at a press conference in Lagos, said the union would make the rescued banks ungovernable for the investors.


He alleged that the investors had entered into secret manoeuvres with the regulatory authority to buy over these banks without engaging stakeholders including labour in consultations and dialogue. While advising investors to steer clear of these banks, Salako said the union would not take the hostile take-over of the banks lightly. He said: “It is only in this country that investors will express interest in any institution without engaging all stakeholders in consultation and social dialogue.


Since these investors have consciously entered into secret manoeuvres to buy over the troubled banks, we are left with no logical option than to conclude that their intentions are not clean to workers’ interest, not altruistic to the industry and definitely not patriotic to our national economy. “We categorically want to issue a ‘caveat emptor’ to these investors as the union would not handle lightly this hostile take-over of the banks.” On the recent mass sack of members in the banking industry, he said the association had informed CBN that the union could no longer guarantee industrial peace and harmony in the sector.


Specifically, he explained that the union cautioned Sanusi against embarking on a suicide mission, which would not augur well for the economy. Salako, who blamed the CBN governor for issuing directives to banks to cut jobs in the industry, lamented: “It is not the duty of the CBN to regulate employment but that of the labour minister.” The mass sack in the banks is coming on the heels of the downturn in the banking industry as amply manifested in the results of the CBN/NDIC joint examinations.


After making huge provisions and incurring net losses nearing N2 trillion, the banks under CBN-appointed new management are leading the mass staff lay-off, adducing operations efficiency as reason. Although the Minister of Labour and Productivity, Chief Adetokunbo Kayode, had condemned the retrenchments, CBN insisted it was necessary “as the banks need to shed fat to remain fit”. The letter, which was made available to THISDAY reads in part: “We are seriously worried that situation report on a daily basis is certainly not helping matters as management of some banks have been carrying out unlawful disengagement of our members.


According to these banks, they are only obeying the directives of the CBN. “Since the governor appears too busy and not in a hurry to engage a strategic stakeholder like ASSBIFI in social dialogue to resolve this labour issue, we are by this letter informing Mr. Governor that our association will no longer guarantee industrial peace and harmony in the sector.” The labour unions had opposed the sale of the banks to the foreign investors on the grounds that doing that would not only make the banks less relevant to the goals of national economic development but alienate the original local investors from ownership in the banks.


But the CBN has always insisted that the ownership interest in the banks will be open to both local and foreign investors. Sources at the CBN said many expressions of interest have come for the banks with “some of them emanating from foreign interests”. The Minister of State for Finance, Mr. Remi Babalola, hinted recently that the government would be disposing of its loan in the banks soon, prompting many into believing that the transactions may be concluded by the end of the first quarter of 2010.


Staff lay–offs have heightened in banks in the past one week with Oceanic Bank sacking over 1000 workers through a process it called voluntary separation. Seven other banks including BankPHB, Spring Bank, Afribank are said to have compiled a list of workers to be eased out this week in an exercise that is expected to send over 6,000 bankers back to the labour market. Intercontinental Bank had announced the sack of 1,339 members of staff last weekend as part of its restructuring exercise.


(Source: ThisDay) 



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