As rising costs of operations weigh on banks’ profitability, with a growing number already in the process of laying off staff, the Association of Senior Staff of Banks, Insurance Institutions (ASSBIFI) has said the workers should not be made to pay for the rising inflation and abnormalities in the country.
Most banks in the country have cut their operating hours as the price of diesel, which is used for powering most of their operations, soared to nearly N700 per litre, from less than N300 in January this year.
According to the president of ASSBIFI, Mrs. Oyinkan Olasanoye, some banks that are in the process of laying off staff have since informed the association. She however noted that the association is still in talks with them as the laying off of staff must follow due process.
Last year, the Central Bank of Nigeria (CBN) fined some banks for not following the proper steps of retrenchment. In May 2020, as the Coronavirus hit economies across the globe, the apex bank had halted a mass retrenchment in the industry, directing that the express approval of the Central Bank of Nigeria shall be required in the event that it becomes absolutely necessary to lay-off any staff in the industry.
ASSBIFI president told NATIONAL ECONOMY that it had also contacted some banks, which it heard were in the process of laying off staff. “Those that have such plans have officially notified us and we are in discussion with them to ensure that they follow due process.
“Some others have denied that they are laying off staff despite the harsh economic condition and the high cost of operations. For those that are saying they are laying off due to the high cost of doing business, we have told them that we, employees, should not be made to suffer the high cost of doing business in the country.
“We all suffer from poor electricity, we all suffer from high cost of diesel, we all suffer from high cost of living. The same way they are buying diesel is the same way we also buy to run individual homes.
“The inflation that is affecting them is the same that is affecting every ordinary Nigerian. So together we can find an amicable solution that will be a win-win for everyone in this situation. So we should not be made to bear the cost of the abnormalities in the country,”she stated.
Speaking on the laying off of staff by the banks, head, Financial Institutions Ratings at Agusto & Co, Mr. Ayokunle Olubunmi, said it is a move that has become inevitable for banks to remain in business and be profitable.
According to him, banks are currently battling both regulatory and economic headwinds, which is telling on their cost of operations.
“The banks are contending with a lot of headwinds, both regulatory and economic. So, it is not rocket science, it is something that is expected.
“In terms of regulation, as banks are getting deposits, including fixed deposits, the CBN is taking it as CRR and paying them zero on it and they are paying interest to customers. Definitely they are hurting on that side.
“There is also the increase in effective tax rate in accordance with the Finance Act of 2021. This year is not going to be very rosy for banks. They are going to see a significant drop in profit after tax. The effective tax rate should move from the 10 per cent tax rate that we see to at least 12 or 13 per cent; so, it is not going to be easy for the banks.
“Then there is an inflationary environment where they operate. The prices of what they also buy have gone up. Banks are feeling the pinch; prices are higher and then look at what is happening with diesel prices. Banks have had to reduce the quantity of diesel that they consume, but they have branches that need to be up for at least six hours a day. ATMs need to be on 24 hours and server rooms that need to be on 24 hours.
“Their costs of operations will actually increase. So, one of the ways they can actually reduce cost is to lay off staff. It is something that they will and have to do. They might do it covertly, no matter how the CBN tries to hold them not to. It is something that has to be done. They don’t have a choice; they have to continue in business.” Olubunmi noted.
However, the discussion on sacking of staff does not cover most of those working in the sector as nearly 60 per cent of the workforce in the banking industry is on contract. There is a Collective Bargaining Agreement (CBA) for affected members, which does not cover the contract or outsourced staff as they are not members of the union.
The last banking sector staff strength figures released by the National Bureau of Statistics (NBS) showed that 42 per cent of the 95,026 staff of banks as at December 2020 was contract staff.
Earlier this year as the price of diesel soared, banks had resorted to limiting stay periods for staff at the office; some others such as Guaranty Trust Bank have cut their service hours. GTB had at the weekend sent mail to its customers notifying them that the bank’s branches will now close by 4pm.
The bank, which had pioneered the 8am to 5pm operating hours, had in the mail notified customers that its branches will now close by 4pm effective from Monday, March 21, 2022.
“We would like to inform you that our branches will now open from 8am to 4pm, Monday to Friday, effective Monday, 21 March 2022. Our secure and convenient digital banking channels are always available to you,” the mail read
When contacted, the spokesperson of the CBN, Mr. Osita Nwanisobi, said he is not aware of the intention of laying off of staff by any bank.