Weighed down with stinking toxic assets and gnawing monetary policies, which abruptly shut down sundry income streams of commercial banks, most banks have now devised strategies to meet revenue projections.
A core revenue window forced open for exploitation by most banks in order to shore up revenue base and meet shareholders expectation at the end of the financial year, is the shaving of customers accounts through a cocktail of charges.
Since the Governor of the Central Bank of Nigeria (CBN), Mr. Lamido Sanusi, shut the Expanded Discount Window (EDW) and directed that all commercial banks move all contingent liabilities to the books from below the line, most banks heavily exposed to the capital market and the downstream oil sector, and, now chewing over non performing loans, have shut lending, beefed up deposit mobilisation and intensified loan recovery drive.
As financial inter-mediators, banks, traditionally create money by extending credit facilities to investors at an interest rate slightly above the Monetary Policy Rate (MPR). But the ripple effects of the global financial meltdown and the venomous monetary policies of the Central Bank of Nigeria (CBN), has ignited a response shock in the financial services sub-sector that have put the treasury of most banks under intense pressure to balance their assets and liabilities.
Although the policies of Sanusi has obscured or distorted revenue forecasts for the banks, industry watchers, had, at the end of last year, predicted that most banks will not make profits, and therefore, no dividend for shareholders investments at the end of the business year.
So, to meet revenue projections, most customers are now being ripped off as their accounts are debited of sundry nebulous charges and interests, that ordinarily mocks banking ethics.
A customer of First Bank of Nigeria Plc, narrated to Business Hallmark how the bank deducts GBP35 each time money is remitted into his account by his relation in the UK. “I have received two tranches of pound sterling from my brother in the UK, each of these transactions is less than GBP1000, the bank deducted GBP35 on each of the transactions. My brother also paid commission to the remitting bank, and this excludes withdrawal charges, and account handling charges. It was not like this at the beginning of the year,” he stated.
Also, a customer of United Bank for Africa (UBA) Plc, who opened a savings account with its Oba Akran branch in 2005, and has over N100,000.00 (one hundred thousand naira) in the account had wanted to operate the account last month when he visited, but was told that the account has been closed by the bank. He was advised to open another savings account with the branch and formally write for the deposit to be transferred to the new account, but all efforts to open the new account was frustrated by the bank.
“What it means is that the money is gone, since they refused me opening another account for the money to be transferred. They didn't even want me to reactivate the account closed by the bank without my consent. To be sincere, this is banking with a different face,” he lamented. A staff of the bank who spoke to Business Hallmark under identity protection, stated that there are thousands of accounts like that that have been closed and the deposits reverted to the headquarters. “Even if this customer you talked about wants the money credited into a new account, this branch where his account is domiciled does not have much hand in it. It would be done from UBA house, but I doubt whether it is possible,” the UBA staff said.
HOW IT ALL BEGAN
In the last half decade, the banking industry in Nigeria enjoyed a phenomenal growth in almost all parameters. A critical analysis of this tremendous growth reveal a major financial services nightmare that has sagged the confidence of Nigeria's banking public.
A cursory look at the Annual Reports of some quoted banks from the Nigerian Stock Exchange, NSE, and the printed Statements of Accounts of some account holders reveal that banks annual turnover have continued to rise with increasing profit margin, whilst individual and corporate account holders are becoming poorer as their accounts are put in the red through deductions of sundry hidden charges. Although this business year will throw open a huge deep in the income profile of the banks following the mess in the sector, which has led to the sack of the Chief Executives and Boards of five banks, but the banks are bent on making as much as they can through their customers.
These rip-offs by banks are mostly catalogue of charges disguised in scattered forms as interests on loan facilities, nebulous administrative charges, distortion of interests on deposits plus sundry other charges that are regularly shaved off from customers accounts without disclosure. At the end of every financial year, these little but regular amounts chopped off from various account holders run into billions of naira and form a major source of revenue for most of the banks in Nigeria today.