Year End: Banks Resort to De-marketing



By Ayodele Aminu,

De-marketing a term used to describe competitors trying to pull down one another “ is gradually resurfacing in the banking sector as damaging text messages are being sent round alleging that some banks are distressed.

Although it is being suggested that some banks and stockbrokers are responsible for this latest round of rumours, there is no clue as to the actual identities of the SMS senders.

In what is suspected to be a build-up to the March 31 financial year end of majority of the financial institutions in the country, some banks, in a bid to outsmart one another by way of accumulating deposits, resorted to the de-marketing tool.

As usual, the text message, said to be in two versions, warned customers to withdraw their deposits from some banks said to be experiencing liquidity problems.

One of such messages, which listed 10 banks as having liquidity problems reads: Banks so, so and so (names withheld) are in trouble over oil and gas and share loans.  Take your money before you are caught up.

Responding to this development, Managing Director/CEO of one of the banks listed, alleged that the de-marketing was the handiwork of stockbrokers.

He said the only solution is to strengthen the stockbrokers by increasing their capital and force them to merge.

Stockbrokers, he said, engage in this unwholesome practice to run down banks so that they might not be able to pay their loans, which had gone bad as a result of the meltdown in the stock market which has lost close 70 per cent of its value between March last year and last Friday.

All banks are paying depositors but brokers that cannot refund investors are sending evil texts to pull down banks so that they may not pay their loans, he said.

This issue had also been discussed at one of the recent Bankers Committee meeting in Lagos.

Bank chief executives at the meeting resolved to issue internal memo warning their staff to desist from spreading rumours aimed at de-marketing other banks.

They also agreed that any staff caught in the act would be dismissed from the industry.

It was also resolved that any bank caught de-marketing another bank would be blacklisted and if two members of staff of the same  bank commit the offence in succession, the bank would be liable to a fine of N10 million. 

Just few months ago, the banking watchdog had also warned banks and their staff that it would henceforth impose heavy sanction on those found de-marketing others.

The CBN in a statement said by its Director Banking Supervision, Ignatius Imala (now retired) said: It will be recalled that the CBN had earlier issued a circular reference BSD/08/2006 on the above subject titled. The Unethical and Unprofessional Practice of de-marketing colleagues/other banks in the Industry by spreading false rumours, dated April 12, 2006.

The CBN has again noted with serious concern the recent practice whereby some officers of deposit money banks engage in the de-marketing of other banks through disparaging comments and the use of negative text messages.

This development, which constitutes a threat to the safety and soundness of the banking system, is unprofessional, unethical and unacceptable. Banks and their staff are by this circular reminded that the responsibility for ensuring the safety and soundness of the banking system is a collective one for all stakeholders.

Banks are therefore advised to caution their staff on this practice as henceforth, any staff of a bank found to be involved in such an act will be summarily dismissed and blacklisted.

Also, if another staff of the same bank is involved in such a practice, the institution will face severe sanctions including but not limited to a monetary fine of N10 million (Ten Million Naira only). Appropriate channel will be opened by the CBN for the report of such unwholesome practice by banks customers and the general public.

Furthermore, in the overall interest of the banking system, all banks are advised to enthrone an appropriate corporate culture that would guide against such practices in the future. -Thisday

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