3 months ago
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Employees at Deposit Money Banks have been enlisted by their employers to achieve financial targets to raise the various banks’ capital base in line with the mandatory recapitalisation requirements set by the Central Bank of Nigeria, The PUNCH has gathered.
The workers assigned financial targets were asked to assist in raising funds by encouraging customers to open new accounts, reactivate old accounts, and make larger deposits, placing them under pressure to meet the targets.
This method, adopted by banks listed as private limited companies, is used to raise funds internally cutting across all cadre of staff including IT personnel, inside sources at commercial banks told our correspondent on Sunday.
This, they said, was because the banks had been unable to effectively access the capital markets to raise enough funds, hence they opted to set targets for their staff to meet their requirements while searching for private placements and initial public offerings.
According to Afrivest, an investment management company, there are 11 banks listed as private limited companies.
A staff who works with one of the banks said the procedure was part of a transparency plan submitted to CBN outlining how the recapitalisation goals would be achieved.
The official, who spoke on condition of anonymity due to fear of being victimised, explained that Union Bank had set a target of N50bn for its staff nationwide to raise through new account openings and other strategies, while Sterling Bank had been contacting customers to reactivate their dormant accounts.
The source said though the targets have remained daunting and unrealistic due to the current economic situation, many workers have embraced it as an opportunity to earn extra income because of the promised incentives.
However, lower-level staff, who lack contacts with high-net-worth individuals, have opted to stay from the scheme.
The source said, “For the recapitalisation exercise that the CBN asked the banks to do, the apex bank gave us a timeline to submit a plan on how it would be achieved and we all did. So what some banks plan to do is a mix of generating the fund internally and also selling shares.
“Shares are for those who are publicly owned. Banks listed as private limited companies that can’t sell shares have devised a way to raise funds by setting financial targets for their staff.
“This target is through asking staff to make sure customers open new accounts with the bank, reactivate dormant accounts, making sure customers make and keep large deposits in their accounts.”
The official continued, “For instance, Union Bank has asked its staff to bring in new funds worth N50bn in the form of deposits into the accounts. The idea for the N50bn also involves non-sales or marketing workers like IT guys, business and back operations staff, and those whose primary responsibility is not to bring in funds.
“The normal marketing workers are still doing their job but those not primarily involved have been drafted in. It doesn’t affect our key performance index but has added a responsibility on us to make sure the banks meet their targets. So far, it’s on a slow rise and people are bringing in funds in trickles because there are monetary incentives.”
The source said other banks are also doing the same by having their staff raise funds too.
Findings also showed that these goals have made bank staff adopt alternative means to reach potential customers, particularly via social media as the competition for capital intensifies.
A Sterling Bank customer identified as Ade mentioned that his bank has made several calls to reactivate his dormant account, He said, “They have been calling me to reactivate my dormant account. They have called about three times. They also sent a customer satisfaction survey. So it appears their staff are under pressure to bring back old customers as part of the recap exercise.”
Similarly, some banks have enlisted the services of social media influencers to promote their offers using platforms like X and TikTok.
An official at the apex bank who is not allowed to speak to the press, said the banks are allowed to utilise various means to raise funds but within the bank’s guidelines.
“Well, banks have truly submitted their plans and can use those means to raise the funds. However, they can’t go out of the stipulated rules.”
Commenting on the development, the President of the Association of Senior Staff of Banks, Insurance and Financial Institutions, Olusoji Oluwole, said the target given to workers is to ensure sustainability and that all staff work together to meet the requirements of their regulators.
“Of course, in any business that is profit-making, everybody is going to have targets. So for the business to be sustained, you have targets of accounts to be opened. Banks are going to sell shares and everyone would have targets to sell shares. It’s nothing uncommon.
“This is something about our survival as an institution. Everybody will indeed have targets. So it’s not something new. It’s not the first time it’s going to happen. Some institutions have already announced rights issues. So there would be no problem marketing that. Institutions that have announced public offers give their staff targets to market to their friends, families, and all the rest. Even stockbrokers will set targets for themselves because they want to make income out of it,” he stated.
He, however, warned the banks against setting unrealistic targets, noting that the capability of every staff member should be taken into consideration before the targets are given.
In late March, the Central Bank of Nigeria directed Deposit Money Banks to recapitalise. Per the CBN recapitalisation circular, commercial banks with international authorisation are to increase their capital base to N500bn and national banks to N200bn while those with regional authorisation are expected to achieve an N50bn capital floor.
Similarly, non-interest banks with national and regional authorisations will need to increase their capital to N20bn and N10bn, respectively.
According to the CBN circular, only the share capital and share premium items on the Shareholder Fund portion of the balance sheet will be recognised in this particular round of recapitalisation.
The apex bank circular said the banks must meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026, using the options of raising additional capital, mergers and acquisitions, and licence change.
Bank recapitalisation refers to the process of increasing the bank capital to meet regulatory requirements, improve financial stability and enhance lending capacity.
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