Kayode Ekundayo And Mohammed Shosanya
30 December 2011
analysis
Lagos — Within the last five months, there has been uneasy calm in the nation’s banking sector as banks manoeuvre in their bid to escape the Central Bank of Nigeria (CBN)’s axe on the recapitalization process.
Though, all the eight banks bailed out with N620 billion by the CBN eventually scaled the hurdled, unfortunately, three of the banks, Afribank, Spring Bank and BankPHB were nationalized, having been taken over by NDIC and subsequent transferred to the Assets Management Company of Nigeria (AMCON) to manage.
They are now known as Mainstreet bank for Afribank, Enterprise Bank for Spring Bank and Keystone Bank for Afribank.
Since August 30, when the three banks were nationalized, other five banks succeeded in their merger and acquisition deals with other Nigerian banks.
Specifically, the shareholders of Intercontinental Bank, Oceanic Bank International, Equitorial Trust Bank and Finbank and Union Bank endorsed their merger deals with core investors, while 99.9 per cent shareholders of Intercontinental Bank ratified the merger deal with Access Bank.
Also, 99.8 per cent of Oceanic Bank shareholders approved the bank’s business combination with Ecobank International Corporation (ETI), Sterling Bank has concluded the acquisition of Equitorial Trust Bank Limited with a total of 3,140,772,888 shares of N0.50 at N1.00 per share of Equitorial Trust Bank’s shares added to the issued shares of Sterling Bank Plc.
The shareholders of Sterling Bank had late in September approved the merger of the two banks. In the same vein, FCMB has also finally acquired Finbank.
Union Bank of Nigeria Plc has opened the rights issue through which shareholders of the bank would be pumping about N9.584 billion through the acquisition of 1,407,291,667 billion ordinary shares. This is aside the injection of $500 million equity and $250 million Tier 11 capital, bringing its investment to N750 million, representing 60 per cent of the bank’s equity through its core investor, a consortium led by Africa Capital Alliance Limited (ACA) and the Overseas Private Investment Corporation (OPIC).
Right now, all the bailed out banks have been consummated and a new banking scheme may emerge next year.
For instance, while FinBank is expected to operate under its current brand name for upwards of 12 months within which the culture and products of the two financial institutions would be integrated. After the integration process, the two banks will merge and operate as a single entity under the FCMB name.
Access bank is expected to merge its operations with those of Intercontinental bank within 18 and 24 months and this is expected to lead to a single entity status by March, 2012.
The proposed merger will be effected through a scheme of merger pursuant to part XII of the Investments and Securities Act (No. 29) of 2007 (“Scheme of Merger”)and when concluded, will result in Oceanic Bank being merged with Ecobank Nigeria, leaving Ecobank Nigeria as the surviving entity.
Consequence upon the proposed scheme of mergers, Oceanic bank, Intercontinental bank and Finbank have been delisted on the official listing of the Nigeria stock exchange
Any hope for the workers?
Although there have not been visible retrenchment since the commencement of the reform including the three nationalized banks but there are palpable fear that by the time the core investors take over the acquired banks many workers may be thrown into labour market.
The Group Managing Directors of Mainstreet Bank and Enterprise bank, Faith Tuedor-Matthews and Ahmed Kuru said recently there would be no retrenchment in banks.
Tuedor-Matthews said: “All we need to do is a lot of training. We need to retool our people. We are also going to embark on culture orientation and ensure people are adequately trained to be able to operate within a competitive environment.”
Kuru said: “Presently we have about 4,200 workers, if AMCON and CBN had not intervened, the employment of those workers would have been put in jeopardy. Also there is the issue of systemic index of allowing any financial institution to go down. So, what they have decided to do is to now provide security support because you do hear then and now that three banks have been nationalized but we do not see that as nationalization.”
But, unions in the banking sector don’t seem to be seeing any benefit in the reforms.
According to the President of the National Union of Banks, Insurance and Other Financial Institutions Employees (NUBIFIE), Comrade Ade Martins Odigie the mergers and acquisition of banks initiated by the CBN have lost the confidence of the people.
Odigie, who punctured the constitutional responsibility of the apex bank to initiate the policy, also said that mergers, acquisition and nationalization of banks are a ploy to deceive Nigerians.
According to him, during the administration of Charles Soludo, he initiated policies aimed at strengthening banks in the country and wondered why the current governor of the apex bank abruptly terminated the robust policies of his predecessor only to replace same with sack of some chief executive officers of banks and so-called mergers and acquisition.
“There is no continuity in the government of the day in the Central Bank of Nigeria. This is just gambling,” he a said.
The union’s president, who criticized the policy of delayed gratuity to his members in the old bank, said none of his members has lost their jobs in the nationalized banks. He however said several members of the union have lost their jobs during merger and acquisition of banks.
It should be recalled that NUBIFIE recently implored top managers of the three nationalised banks- Spring Bank (now Enterprise Bank), Bank PHB (Keystone Bank), and Afribank (MainStreet Bank), to carry union members along on issues affecting them and stop anti-labour practices.
It said: “There is need for change in attitude of management of the nationalised banks towards the security of job of our members and prevailing uncertainty. We, therefore, call on the management to henceforth not only recognise the union, but carry along all leaders on issues affecting the members. There must be workplace democracy in the system.”
National President of Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), Comrade Olusoji Salako, who also aligned himself with the position of his NUBIFIE counterpart, said his members have not been affected by the recent nationalization of banks.
“As at today, we have not heard of incidence of job loss due to the nationalisation of some banks,” he said.
He said the workers may be affected next year by the time the exercise clocks one year.
The two unions in the banking industry – the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) and the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE) had recently resolved to confront CBN over its inconsistent policy reforms, which it said may further erode the confidence of the general public and create another job crisis in the industry.
They kicked against the “conflicting pronouncements” by the CBN regarding the status of the rescued banks, noting that the apex bank policy has undermined the integrity of the banks and created crisis of confidence in the industry.
ASSBIFI President, Comrade Sunday Salako, explained that if the current scenario of playing to the gallery in policy formulation and implementation of the CBN was not checked, the objective of the banking sector reform will be defeated.
He threatened that the union will move vehemently to resist any inconsistent policy reform of the apex bank, adding that the union will not fold its hands and allow employers to disengage its members unduly.
Salako said: “We have resolved that if the current scenario of playing to the gallery in policy formulation and implementation of the CBN is allowed to prevail without check Nigerians should bid farewell to the original motive of the reform policy which was to have a very strong, sound, healthy and competitive banking sector that would provide the necessary real sector growth in particular, and the economy in general.
“The workers in the banking industry resolved to move against the frenzy of activities going on in the financial sector. The banking sector in particular, which has been the only sector consistent in employment generation, has been forced through sustained interventionary reform measures into massive job losses.”
He said the association will collaborate with stakeholders in the banking industry to checkmate the “insanity and frenzy of activities” of the apex bank.
“ASSBIFI will collaborate with all stakeholders, associations and other relevant stakeholders to checkmate the current insanity and frenzy of activities going on in the financial sector as various overt and clandestine moves and positioning are being maneuvered by several interests keen at becoming leading partners in the on-going processes for mergers and acquisition in banking industry”, he added.
Speaking also on the CBN reforms, NUBIFIE president, Comrade Ade-Martins Odigie, said: “There is need for the workers not to fold their hands to let the policy of job losses befall them. Let it be known and put across to the finance industry regulatory authority that workers will no longer pay for any of the lapses created by our employers. On the record, we have resolved never again to subsidise the indulgencies and recklessness of a system that will use and dump our members.”
“We have resolved that in view of the stated objectives that the Assets Management Company of Nigeria (AMCON), is supposedly established to give life to debt-ridden rescued banks through a complex combination of acquiring debts and assets, the management and operation of such strategic organisation should therefore be open and transparent for the reform policy to be generally accepted.”
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