Before the banking sector goes into coma

Before the banking sector goes into coma

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Last Saturday, I ran into Tade, a senior colleague, at the Lagos mall, Shoprite. Although I had not seen him in about five years, we had managed somehow to keep in touch. Tade is a mentor who played a major role in shaping my journalism career. At a point in my media career, I was certain journalism was not my calling and almost quitting.

But it was Tade who encouraged me, sharing experiences that gave me the courage to triumph over newsroom bullying. As I approached Tade that evening, lines of defeat and frustration were etched over his face. I noticed immediately that all was not well. He wasted no time sharing his tale of woes. He left journalism in 2006 for the then booming Nigerian banking sector. Nigerian banks had just earned global recognition with what appeared, at the time, to be solid balance sheets of 25 recapitalised banks under the watch of then Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo.

At first, this appeared to be a wonderful move, particularly since he was going to finally bid farewell to perpetual hustling with little pay. He had, however, hardly settled down when the song began to change. The banking sector soon became a nightmare for bankers. In the wake of the 2008 global financial crisis, bankers had to meet monstrous deposit targets to keep their jobs. The crisis brought the world’s financial giants to their knees and exposed some big Nigerian banks as corporate frauds.

In 2009, the Lamido Sanusi-led CBN initiated reforms to stem the slide of Nigerian banks into the pit. The resultant financial tsunami sent big names in the banking industry tumbling from their high offices. It also consumed thousands of middlelevel and lower-level officers. ‘My Oga’ as I fondly called him, was forced to resign along with about 5,000 workers who lost their jobs to this tidal wave of job losses.

Sadly, his wife also lost her banking job and life became really unbearable for their family. He tried going back into journalism but was unlucky. Somehow, fate seemed to push him in the direction of struggling media houses only. I don’t need to linger on how bad his situation became because on the day I met him at Shoprite, I wept when he told me to give him N2,000.

Of course, Tade is not the only one in his world. There are thousands of former bankers, who, today, cannot afford to eat regularly, after years of wandering in financial misery. Tade’s plight drew me back to a frightening discussion I had, three weeks ago, with an American journalist, John Claude. He predicted that Nigeria’s banking sector would soon experience yet another upheaval. He added that this time it might be difficult to handle such a crisis because of the poor handling of the economy so far.

To Claude, the prediction of the Governor of the Central Bank of Nigeria, Godwin Emefiele, that the nation was likely to face an economic crisis in 2016 if activities in the agricultural and manufacturing sectors were not revived was baseless. According to him, that crisis, if it ever happens, will be triggered by disasters waiting to happen in the banking sector that Emefiele supervises.

Experts have also repeatedly warned that the wounds of the 2009 banking sector crisis may soon be reopened if urgent and genuine steps are not taken to clean up banks’ books and truly ascertain the health of our banks. I also belong to this school of thought. But Emefiele has insisted that our banks are safe and sound; in spite of the biting effect of the movement of government’s funds from banks to a Treasury Single Account.

He has said that no bank has the Capital Adequacy Ratio problem; he has also assured Nigerians that the CBN has internal control mechanisms that determine stress points daily. Reassuring as his assertions may seem, keen students of banking history know that when a regulator strives to say all is well when indicators point in the other direction, then Nigerians must be warned to quickly fasten their seat belts.

In 2008, even when it was glaring that the global financial crisis could consume Nigeria’s big banks, the regulator at the time gave Nigerians a false sense of confidence until the situation degenerated into irreparable holes in the once trumpeted strong balance sheets of consolidated banks.

The handwriting on the wall is clear enough at the moment. Top bankers are said to be making plans to escape before the doomsday; they are searching for new jobs. Banks are replacing professional bankers with contract staff to cut costs. Deposit mobilisation has assumed a more aggressive dimension. What more do we need as proof that all may not be well?

With many of the currently existing banks set to lose the over 400 cases of excess charges, running into several billions of naira at the Federal High Court, and the TSA regime of the current administration sending bankers back into the banking halls, Nigerians do not need Emefiele to tell them that an albino is a white man.

All we need at the moment is urgent and genuine assessment of the health of Nigerian banks to prevent sending more Tades into the job market.

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