The Nigeria Labour Congress, NLC, and the Association of Senior Staff of Banks, Insurance and Financial Institutions, ASSBIFI, have raised concerns over job security among others in the new banks’ recapitalization ordered by the Central Bank of Nigeria.
This follows reports of the loss of 12, 000 jobs in 2005 and 2010 as a result of similar exercises.
The CBN had on March 28th announced the upward review of the minimum capital requirement for banks in the country.
The Apex bank directed a minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International, National, and Regional licenses respectively.
Similarly, in 2005 and 2010, the CBN carried out recapitalisations as part of Professor Charles Soludo’s and Lamido Sanusi’s regimes, according to Vanguard.
The recapitalisation policies of Soludos reduced the number of commercial banks from 89 to 24 while that of Sanusi has reduced the number of banks to about 20.
According to the report, during these two exercises, a total of 5,000 direct employees were laid off and over 7,000 Indirect workers employed as casuals, contract or subcontracted jobs have been eliminated.
Commenting on the development, the President of NLC, Joe Ajaero, said “The policy of recapitalising the capital base of banks in the country is not a new one and we have all seen its consequences.
“The truth is that when the capital base of banks becomes eroded especially by the forces of foreign exchange which renders the capacity of banks to continue serving as major players in the international market and the domestic economy especially for an economy that is highly exogenously propelled, it becomes imperative that their capital base are shored up to be in sync with the objective socioeconomic realities.
“We ask ourselves, is there a need for the recapitalisation policy? Yes, there is but who created the environment that undermined the capital base of the banks?
“It is the government’s economic policies, especially the twin policies of hike in the price of Premium Motor Spirit, PMS, and the floatation of the Naira.
“These had serious consequences for domestic prices of goods and services which shot up through the roof.
“The implication on all financial holdings in Naira is that their real value nose-dived to the extent of the inflation as unleashed by the policies. “What we saw during the last exercise was that many banks were unable to meet the new requirements within the required period while some were able to scale the hurdle.
“Those that were unable to scale the hurdle were either bought by other stronger banks or went into mergers to shore up their capital. Very few did not find suitors and went under as a result.
“The implications of these for employment relations are many and varied. (1) Acquired or merging banks will mean the loss of jobs to many, especially those crossing from the old entities to the new. (2)Those who didn’t have suitors will go under so, will not only lead to job losses but will also lead to loss of gratuities and income for the workers. (3) The general implication for the economy is that the capacity of the economy to absorb new entrants into the job market will be reduced leading to greater unemployment. (4) We are also going to experience increasing tension within the Banking Industrial relations sphere.
“Employers in the sector will seek cost-cutting measures which often begin with workers’ take home. Negotiation of terminal benefits and redundancies will take centre stage and will lead to severe grievances in workplace relations in that sector.”
Meanwhile, in his remark, the President of ASSBIFI, Olusoji Oluwole, said, “The new bank recapitalization had come to stay and it is a good development for the sector and the economy.
“An increased capital base gives banks room to delve into bigger transactions locally and internationally and expand their capacity and offering.
“At moments like this, we usually expect banks to merge or be acquired which have implications on job security.
“We understand this and have expressed our concerns to the CBN, Ministry of Labour, and Employment and our labour centre.
“As events unfold we will have a clearer view of what is to come especially with the two years period of compliance given by the CBN.”
