There is no doubt that responses of some of the banks to Coronavirus Pandemic through financial contributions to governments may have exposed the fragility of the industry.
This is because. According to dome analysts, the development will bring about flexing of muscles between labor and the banks.
Nigerian banks are facing very challenging conditions due to pressures in the domestic operating environment, ocassioned by downside risks which are heightened by the coronavirus outbreak typified by periods of lockdown, oil price weakness, and global economic turmoil.
These have given rise to more severe economic and financial market fallout, a development that may force some of the banks to jettison real intermediatopn for ‘quick money ventures.’
This is particularly for the lenders that are heavily public sector biased, which have considered it necessary to make donations to the coffers of both the federal and state governments to curry favor through public sector deposits.
But it has become an irony of fate for some of the banks to make their workers scapegoat.
Specifically, the banks are facing the threat of rising bad-debt levels as a crash in oil prices and the risk of a naira devaluation coincide with the pandemic that has shuttered businesses.
More worrisome is with some of the Monetary policies of the Central Bank of Nigeria ( CBN) in the area of cash reserve ratio (CRR), for instance, which is impacting negatively on their operations and dearth of fixed instruments for investments.
The implication is that some of the banks may resort to abandoning real intermediation by going for public sector funds by all means.
One is therefore not surprised at the ‘survival strategies’ being considered by some of the banks.
For instance, Access Bank Plc, which recently donated the sum of N1 billion, is said to be planning to cut salaries and as well dispense with services of some of the support staff.
Indeed, the reductions are expected to start any moment from now unless business conditions improve, according to an analyst.
Some management will get as much as a 40% decrease, he said.
He further said that those to be affected by the mass retrenchment are 75% of the bank’s staff, most of whom are outsourced and are offering “non-essential services”.
Our investigations further showed that some other banks donated to some state governments and are expecting consolidation of their grips on the states’ funds.
According to a source in one of the beneficiary states, one of the big lenders donated over N18 million to the state.
According to the analysts the development may have posed moral burden for the banks as well as the need for strict supervision by the CBN, which they all agreed is currently lacking.
They further contend that all industrial disharmony will soon erupt in the industry as the labor may tackle the banks on the impending restructuring.
While other banks have commenced clandestine moves toward rationalization, the ability of labor to tackle them and the attendant strikes are being awaited.