- Payment of 2016 dividend unlikely
- Failed N600 million T24 app investment compounded bank’s woes – Insiders
- CBN should probe management – Investors
The Central Bank of Nigeria may soon be forced to penalise Sterling Bank Plc heavily, owing to an alleged liquidity crisis currently rocking the financial institution.
According to findings by our correspondent, the bank is experiencing what stakeholders have called financial stress due to a combination of factors, key among which are fraud allegations stemming from an alleged failed multi-million naira operations app investment.
The Point’s findings followed several complaints made by former staff members and shareholders of the bank to the CBN on the aforementioned allegations and unfair employee treatment against the management of the institution.
According to a reliable source at the headquarters of the bank in Marina, Lagos, the liquidity crisis has its genesis in the bank’s investment of over N600 million on T24 Core Banking Applications in April 2016.
T24 CBA is said to be a real-time banking application that enables online operations and removes the need for end-of-day processing.
The source said the investment was ill-informed and expressed disappointment in the management for not listening to contrary views before it purchased the application.
According to him, the bank made the move at the wrong time because it did not have the financial strength to acquire the app at that time, especially as there were no complaints about the old software.
He added that the development was more disheartening because other financial institutions like Zenith Bank, First Bank of Nigeria and the defunct Bank PHB, among others, had previously used the app but had to change to an advanced software as far as eight years ago, after they had technical issues with it.
He said, “The argument of the Information Technology unit was that most banks had abandoned the software because it almost crashed their systems, as they recorded lots of complaints from customers over delay of credit/debit alerts in their accounts.
WE HAVE WRITTEN PETITIONS TO CBN DEMANDING FOR PROBE OF THE MANAGEMENT OVER THE ALLEGATIONS. IF NOTHING IS DONE, WE ARE GOING TO COURT BECAUSE WE WILL NOT ALLOW ASSET MANAGEMENT CORPORATION OF NIGERIA TO TAKE OVER THE BANK. IF THAT HAPPENS, IT MEANS WE WILL LOSE EVERYTHING TO THE NEGLIGENCE OF THE BOARD. AN END MUST COME TO THE MENACE OF MISAPPROPRIATION OF OUR FUND
“The transition affected hundreds of our customers as some of them were unable to withdraw or receive credit or debit alerts after the company spent several millions of naira on teams that went to Kenya and India for trainings on the app.
As at 2008, no Nigerian bank was using the app except the CBN and that is because it wouldn’t face the operational issues faced by Sterling Bank. But the management insisted and went ahead to install it for reasons best known to it.”
Another top source at the bank’s Marina headquarters office in Lagos, who spoke with our correspondent, disclosed that the liquidity problems of the bank also derived from the fact that the bank had exhausted the CBN window.
The development means that the account of the bank with the apex bank has been overdrawn with a couple of charges like interest. “That is one of the reasons we cannot buy dollars from CBN because we can only buy one per cent of the amount we have with CBN. That is affecting our liquidity status and we might soon be sanctioned by the apex bank,” he said.
These findings were corroborated by yet another top source at the CBN, who told our correspondent that Sterling Bank had failed “sprinkles of liquidity tests that have been carried out on the bank by the apex bank.”
He said, “Some audit teams of the CBN, which had visited the bank several times after the institution launched the app in August 2016, have passed votes of no confidence on the management for certain managerial decisions that the teams believed hampered its liquidity status in the 2016 financial year end.
“We blamed the bank for embarking on such initiative (N600 million worth T24) when it did not have the financial muscle to foot the bill.
As far as I am concerned, the management has failed to prioritise its needs. CBN has also sanctioned it several times on excess withdrawal from the apex bank’s window and might soon take a more drastic action.”
Meanwhile, with stakeholders uncertain as to what and when the CBN would officially make a declaration of the Sterling Bank’s status, a Dubai-based investment bank, Arqaam Capital, has listed the bank in a report as one of seven undercapitalised banks in Nigeria.
The report, which is a result of a stress test on Nigerian banks, disclosed that the banks were undercapitalised to the tune of N1 trillion.
According to the report, the bank will need urgent financial injection to save it from a full blown crisis.
The report of the test claims that the conditions of the bank were further compounded by currency depreciation and souring loans.
“Nigeria’s banking industry is experiencing a full-blown financial crisis as failed fiscal and monetary policies had led to a credit crunch.
Capital adequacy ratios in Nigerian banks were set to worsen because of the depreciation of the naira and huge non-performing loans,” the report said.
WE’RE BEING DISENGAGED UNFAIRLY- WORKERS
Some employees of the bank revealed that the bank had issued a memo to all staff across the country that the board had approved a 30 per cent increase in their salaries, a development most of the workers saw as a laudable effort to reward their hard work.
It was, however, not to be, as investigations revealed that the ‘salary increment’ move was made when some of the Executive Directors, who were the brain behind the ‘failed’ T24 app, needed the support of heads of some departments.
A few weeks later, the management reversed its decision as it presented two options to the staff. One was to increase their salaries and conduct a massive downsizing and the other was to maintain the old salary without disengaging anyone.
Confused unit heads were later shocked when the bank embarked on series of mass retrenchment.The first set affected an Assistant General Manager, who had allegedly antagonised the T24 app, six senior managers and 15 others. A few months later, about 40 other members of staff were allegedly dismissed. Though, most of them were given their entitlements, they were reported to have been forced to resign within 24 hours.
One respondent, who did not want her name in print, related her story with eyes laden with tears. She said that some of the allegations against management were never discussed amongst staff for the fear of those staff revered as ‘cabals.’
She said, “I suffered in the hands of some of the cabals when I was transferred between two regions without applying for the transfer and I ended up not paid my transfer allowance. Later, I learnt that someone fraudulently signed on my file that I agreed to move without pay. I did series of mails fighting for my right but later got frustrated.
“Lots of abuses and deprivations, especially if you fail to do their bidding, went on. After about four years with ETB before the merger, I wasn’t paid a dime as entitlement. After another five years with Sterling, I was told I had no gratuity. That bank is filled with cabals.”
Another ex-IT staff of the bank also told his story: “Most of us were allowed to work normally for the day before we were handed dismissal letters around 5pm. I did not see it coming. “All I could remember is that I was given a N10 million target, which I couldn’t meet. Out of the amount, I raised N6 million and that was not good enough for the bank. I was employed as an accountant, not a marketer and was given a target. To me, it was against the labour law for the company to compel me to do what .
I was not employed for. The pathetic issue was that my entitlements were slashed and nobody bothered to give me reasons why that happened,” he lamented.
SHAREHOLDERS READY FOR A NODIVIDEND SHOW-DOWN
With its current financial standing indicating that Sterling Bank might not pay dividend to its teeming investors, some shareholders of the bank have threatened to boycott their investments in the bank, if the management failed to release the delayed 2016 annual result and clear the air on the allegations levelled against it.
The threat came against the backdrop of the allegation that the management knew that the T24 app had technical issues before it invested in it.
Part of their grouse is that investors are not supp o s e d to pay for the negligence of the management, just as they expressed the belief that such issues and others should be probed by the CBN.
The National President, Constant Shareholders Association of Nigeria, Mr. Shehu Mikail, alleged that Sterling Bank’s management had plotted to fleece the investors at the end of the financial year, when the bank will blame its inability to pay dividend on the economic recession witnessed in the country.
According to him, wasting over N600 million on an app that has failed and abandoned by other banks translates to lack of corporate governance and that is unacceptable to the investors.
He said, “We have written petitions to CBN demanding for probe of the management over the allegations. If nothing is done, we are going to court because we will not allow Asset Management Corporation of Nigeria to take over the bank. If that happens, it means we will lose everything to the negligence of the board. An end must come to the menace of misappropriation of our fund before it is too late.”
Another shareholder activist, Mr. Segun Owolabi, told The Point that investigating the allegations against the board was a welcome development. He alleged that the intention of some executive members of the bank was to divert part of the N600 million meant for the T24 app for personal use.
“The probe of the suspected executives must be made public and they should be sanctioned if found guilty. The apex bank must not sweep allegations under the carpet. Shareholders’ fund must be protected,” he stated.
However, efforts to verify the allegations from the bank were futile as the Head, Media, Corporate Communications of the institution, Mr. Ayo Ashaolu, failed to respond to our correspondent’s enquires as promised.
