Thursday, July 11, 2019 / 01.06PM / Teslim Shitta-Bey, Managing Editor/Proshare research / Header Image Credit: WEbTV
Workers at
Ecobank Nigeria Plc this morning carried out a protest at the Head Office of
the bank at Victoria Island Lagos. The workers and their union representatives
carried placards insisting that the bank should renew a two-year contract
entered into between the bank and its contract workers in 2017.
According
to a Union executive, who asked for anonymity, “we had earlier two years ago
negotiated a two-year contract arrangement with the bank, with a provision for
a rollover of the terms and conditions of the previous agreement on negotiated
terms.” A major reason why the bank is unwilling to renew the two-year contract
agreement is that it is grooming over 300 young graduates at its academy to
assume full-time positions in various capacities at the deposit money
institution (DMB).
Seeding
Graduates for Work
The programme, according to the
bank’s corporate communications department, combines three categories of Entry
Level, Graduate and Management Trainees with a program duration of 2 months, 12
months and 21 months respectively.
According to the department, the
bank’s training development programmes are part of its talent development
strategy to produce medium to top-level banking professionals to feed into the
bank’s talent pipeline. The corporate communications department notes that the
programmes prepare candidates for banking careers in positions aligned with
their competencies and experience at the entry point of functional
pre-managerial roles.
As part of its forward
plan, the bank noted that 100 fresh graduates recently joined Ecobank at the Entry
Level programme – which involved two months of training for fresh graduates in
preparing them to join the Bank’s staff Corp expected to grow their experience
along with the ranks.
The bank’s first batch of
25 Graduate Trainees who passed out after 12 months of training has resumed
full employment.
According to the bank’s chief
executive, Mr. Patrick Akinwuntan, “This programme is our way of creating
future leaders for the industry. We are investing in people to accomplish our
vision as a bank. A key success factor of any bank is capital, and we must,
therefore, train those who will be empowered to oversee this capital and put it
to good use in the interest of depositors and investors.”
Managing “Us” Vs “Them”
The bank's strategy of training entry-level staff for integration into the bank's various operations has placed it in conflict with its contract personnel who are seeing their employment threatened by new graduate trainees, resulting in today’s protest at its head office. In a press statement released yesterday 10, July 2019 Ecobank explained the reason for the termination of its contract engagement of vendor managed personnel. According to the bank, among factors responsible for the termination of the contract were the following:
The bank’s press release further
stated that it was not under obligation to renew the contract of the staffing
vendor. The bank noted that this was particularly clear when viewing the issue
in the context of the huge personnel development costs incurred to groom new
graduates for permanent employment positions with the bank.
Rebuilding A Brand
In the light of recent operating
challenges of the bank and the adverse impact compliance with IFRS9 and IAS21
had on the bank’s annual financial statement in 2018, the current review of
internal processes, staffing and costs are understandable. The implications of
the impact of IFRS9 saw the bank witnessing a fall in turnover and weakened
shareholder capital resulting in the parent company providing additional capital
support of USD58m in 2018.
The bank has been able to hold
impairments down from N411.05m in 2017 to N263.9m in 2018. The improvement in
impairment was the result of a slowing down of lending activities and a rolling
back of poor credit in both the commercial banking sector of the bank’s
business and Investment banking activities.
Table 1 Ecobank’s Five (5) Years Revenue and Profit Numbers 2014-2018
Source: Ecobank Audited Annual Accounts 2014-2018
Ecobank’s generic strategic objectives have made the staff recruitment remixing inevitable. In the last few years, the bank’s Nigerian operations have been its Achilles heel, while profitability and share of banking wallet were growing for the group in other African markets, the Nigerian market was laggard. To turn things around the bank seems to be focused on improving the share of customer banking wallet by improving staff service delivery quality and customer service experience. The improvement in customer experience is designed to create brand differentiation, thereby improving brand loyalty as well as equity (see the first quadrant of the illustration below).
Reworking the business model by Ecobank has counterpart actions across the globe as Germany’s largest bank, Deutsche Bank, plans to part with 18,000 workers worldwide as it exits the global equities business. Deutsche Bank decided on the top to bottom review of its operations as it attempts to become leaner and more profitable, thereby consolidating the business’s going concern status. Similar actions are likely to be adopted by banks other than Ecobank Nigeria in the local money market as margins thin down and banks increasingly search for best-fit market size and strategy approaches.
Illustration 1 Ecobank
Nigeria’s Three (3) Generic Strategies
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