Dear Sir

The New MD/CEO
Inter-Lagoon Bank PLC
Plot 419, Distress Avenue
Victoria Island
Lagos

18th August 2009.

Dear Sir,

Thank you for your SMS and subsequent email assuring me of your bank’s financial stability after the CBN’s ‘Hammer of Thor’ struck the bank’s executive ménage relieving its directors of their most lucrative positions and the CBN’s consequent ‘dole out’ aimed to address your insolvency.

You may want to know that I received your missives in good health as I have developed a thick tegument and a vibrant lion’s heart to trounce such occurrences. Who could do without these anyway, if survival is vital in a country like ours? I am convinced without the minutest of doubt that both the SMS and email were not meant for measly customers like me because the information was disseminated en masse for a commercial purpose. Sir, be aware that this memo is neither to spite you nor ‘our’ bank. In fact, your new role in cleaning the augean stables is one no one will envy or touch with a long pole. I can only wish you the best and pray you succeed.

My no-brainer position in your bank’s scheme of priority customers have been reiterated many a time and via diverse means. Not a few instances abound. Whenever I have issues, your ever-sassy customer relation officers only warm up to me (or do otherwise) as a function of what my account balance reads at the particular instant of time. Moreover, several times when many individuals (including my humble self) highlighted (often times on the pages of newspapers and through various means) unwholesome bank practices, manipulated share prices on the floor of the Nigeria Stock Exchange, unrealistic profit declarations that do not match with realities of our economy (particularly in the manufacturing sector), unhealthy inter-bank competition and rivalry, unsustainable banking operations and expensive corporate governance lifestyle, debasing marketing strategies and many more; we were treated like an infant’s fart.

I also remember with pain when all banks went on rampage to secure our meagre funds through all means devisable. I joined the bandwagon (against my convictions) to purchase your bank shares and many others. Alas, I had my investments reduced to a paltry figure. During the run, I observed with dismay how you gave loans to your cronies to cash in on short-term gains because you issued their share certificates without delay while those of long-term investors like us are still in transit many years after. Their voracity eventually crashed the stock market. It seems to baffle me why would and should I ever matter to you or your bank at this point in time? As a matter of fact, it leaves a suspicious taste in the mouth.

As much as I would have loved to play a role (major or minor) in rescuing ‘our’ bank out of its present financial ‘kettle of fish’ and doldrums, regrettably I am handicapped beyond imagination. My salaried job which is presently my only source of income has merely guaranteed me peanuts with a safe abode under my mattress or sometimes my pillow. Unfortunately, the prevailing global financial meltdown (which the CBN once claimed we are immune to) has done exactly that to my remuneration – melted it. My salary now perfectly fits into my back pocket. You would agree with me that it would not make any smidgen of sense to drop this trifle into your bank coffers where predators, waiting (in the forms of VAT, hidden bank/transaction, ATM and other undefined charges) will further ravage whatever is left to nothingness.

Other businesses that could have brought me immense prosperity and whose subsequent returns could have accrued to your bank’s purse never saw the light of day. No thanks to the stringent conditions given by the bank which snuffed life out of my numerous business proposals when I came knocking for loans. The impossible interests requested for snuffed life out of the brilliant business ideas and the collaterals you asked for dealt the final blow – the only thing you did not ask for was my life. It is heart-rending however, to discover that most of your bank mega debtors that have brought it into this pickle secured these loans with no collaterals. It is more painful to observe how the CBN doled out many parts of a trillion naira to correct a few individuals’ (trusted with public funds) inadequacies and exuberances. It looks like robbing Peter to pay Paul. These are monies that otherwise could have been used to address issues that will directly impact the lives of not a few Nigerians in the infrastructure, power, education, agriculture, health and manufacturing sectors.

Of course, I do consider your bank not to be the only scourge creating its present condition. Many ‘culprits’ should not go absolved. First is the CBN itself – the supposed watchdog – who cannot claim it was oblivious of the rot being exposed now. Moreover, the piecemeal audit and exposure of the banks’ true conditions is not without some clandestine schema (of which you played into its gallery). Rating outfits that led you on a deception trail should also be blacklisted. They enjoyed the funfair while it lasted. They created a mirage of confidence that never existed either through their ignorance or deliberate cover-up. Also on the malefactor list are the ‘big boys’ – the mega debtors. They borrowed money to execute awry, failed businesses that left you the lenders to lick both your wounds and theirs. In addition, the arrogance with which they carry themselves should tell you that retrieving the borrowed funds from them will be almost impossible.

Do not be deceived by the harangues of the toothless bulldog tagged the EFCC aimed at helping you recover your funds from the untouchable ‘big boys’. It is all part of the script. Moreover, the Federal Government has also placed itself in a position where it cannot afford to throw stones because it resides in a glass house – otherwise where would the funds for the 2011 elections come from?

Sir, if indeed I matter in your bank scheme of operations I would like to lend my layman ‘non-expert’ advice aimed to help retrace ‘our’ bank steps from ignominy to fete.

Douse the voracious thirst to be the biggest – it has been proven now that the biggest is not the brightest. Flee unhealthy inter-bank rivalry – it will grind all involved to nihility. Do not covet accolades and approval from rating agents. Remember, once beaten, many times shy. Be reasonable with your lending rates – your mega debtors never argued the inordinate interests you slammed on their loans. They could not have or otherwise you might change your mind. Directly empower the manufacturing sectors while reducing investments into rent-seeking sectors and high-risk-high-yield businesses like the one that is almost causing your ruin. Trim down operational/overhead costs – flashy cars, glamour, expensive globe trotting, reality TV shows and adverts, imposing office buildings and exotic locations. In the present world of high-tech automation, banks can function well in small well-serviced office spaces. Play down on expensive corporate governance lifestyle. Finally, be open at all times. Say it as it is even if your balance sheets are more of a red colouration. Remember, public trust is the greatest asset.

Accept my widow’s mite.

Sincerely,

Ad.Mi.A

Nigerian Banks, ATMs and Customers: Matters Unending

The edited version of this article was published in the ThisDay Sunday newspapers commentary on Sunday, 20th January 2008.

The evolution of the Nigerian banking sector as a result of the Central Bank of Nigeria (CBN) reforms within the last couple of years with particular reference to recapitalisation was welcomed by Nigerians with motley opinions interlaced with a lot of cynicism and goodwill. The (re)capitalisation exercise which was just one of the various items of the reform agenda as spelt out by the professor at the helm of affairs of the Nigeria’s apex bank, generated a lot of moots (I think capitalisation was it because it could not be said that a lot of ‘banks’ were capitalised in the first place).

Debated arguments ensued from all facets and sectors of the Nigerian public as both professional and recreational economists were all assaying to outperform one another in demonstrating their (un)reasonable persuasions to buttress their stance and to buy the inexorable party over. The unfortunate Nigerian who could not get any opportunity to and/or did not participate in the squabble (either due to his ignorance, nonchalance, dispassion or total disbelief in the Nigerian system) so as to advise from his ‘wealth of experience’ notwithstanding, hoped for the best either way the pendulum of the recapitalisation exercise swung.

About 3 years after the process was initiated, 25 banks evolved either from mergers, acquisition, reconsolidation, repositioning, realigning, et cetera (the list of the recapitalisation patois is endless) out of over 80 banks which were adjudged to be a conglomerate of finance kiosks. With all the arguments and counter-arguments that characterised the recapitalisation exercise with its resulting resurgence of the 25 banks, the customer should be better for it. Irrespective of any school of thought about the new face of the Nigerian banking sector I believe both proponents and opponents of the reform and even the banks ultimately want to make sure “the customer is king”. The underlining fact that should inform any posit with respect to the CBN’s reform agenda is to enhance credibility of the banking sector, increase customers’ satisfaction, empower businesses at all levels, buoy the Nigerian economy at large even as the robust banks serve as the engines to drive the emerging economy.

While it is obvious that the banks have benefited immensely from the process they were reluctant to be a part of initially (going by the robust capital assets they have acquired by mopping enormous funds from the public), alas! much is left to be desired with regards to their corporate responsibility both to the Nigerian economy and their customers, as above-mentioned (Please read Ijeoma Nwogwugwu’s ‘My Mercedes is Bigger Than Yours’ published in ThisDay newspaper, 26th November 2007). The banking sector continues to dominate activities at the Nigeria Stock Exchange. One would naturally expect this to translate in tangible and visible economic developments and empowerment of businesses; however this is not the case. This can be explained by the continued stunted growth in the manufacturing sector. It goes without saying that until the growth in the manufacturing sector is considerably at par with that of its banking counterpart, ours will not cease to be a service-oriented, rent-seeking economy. The Nigerian banking sector lags behind in its responsibility to provide core banking services. Our banks today are witlessly still deposit-driven while they are ever-reluctant to take even the minimum of risks to empower the smallest scales of business, not to mention the lack of professionalism, etiquettes, and work ethics a lot of them still portray. This remains a discourse for another day.

The use of the Automated Teller Machines popularly known as the ATMs is not a new technology. This has been in use in most third world countries many years back. All thanks to the banking reforms which brought the use of ATMs to the doorstep of Nigerians. The use of these cash dispensers wherever they are being used in any country of the world is always a win-win situation both for the bank offering the service and the customers that make use of the machines. However, this is not the same in the post-reform Nigerian banks.

An obvious advantage of the use of ATMs is the decongestion of banking halls. Customers can withdraw cash and know account balances without having to enter their banks. I schooled in the Netherlands for almost 2 years. Throughout my stay I entered my bank only on three occasions. The first occasion was when I had to open the account; the second was necessitated to effect a change in my residential address for onward receipt of my account statements and other correspondences; while the third afforded me the opportunity to close my account. All transactions (purchase of groceries, shopping, cash withdrawals, local/international inter- and intra-bank funds transfers, et cetera) were done via my debit card and electronic banking. Cash deposit was even made possible using the ATM!

While I am not asking Nigerian banks to deploy this “state-of-the-art” technology at this point in time (because I am sure the response will be “…Rome wasn’t built in day, bla bla bla”), the salient point being made here is that the use of ATMs play a big role in decongesting banking halls while waiting to effect the least of all banking transactions. This is to the benefit of both the bank and its customers. The customers and the banking staff are afforded the opportunity to face more pressing businesses, withdrawal/cheque slips are hardly used (which saves both the bank and its customers money) and an atmosphere of credibility, effectiveness and professionalism is created, among other things.

To reiterate, this new development in the Nigerian banking sector should benefit both the bank and its customers and if there are any costs to be borne in the deployment of this service, both parties should knowingly, consciously and agreeably bear the costs. Nevertheless, this is not to bear on the Nigerian banking landscape. I will give some instances.

Intra-bank ATM transactions in all Nigerian banks attract a service charge of N100 (almost one US dollar!) for every withdrawal. In simple terms, if I have a UBA debit card and I want to withdraw money (no matter how small) from, say an Oceanic bank ATM, the sum of N100 will be deducted from my account. This goes vice-versa for all the banks and for every withdrawal I make at any time, intra-bank using the ATM. This, I consider to be indurate and insensitive of both the banks and the service provider. During my sojourn in the Netherlands, intra-bank ATM withdrawals attracted no inordinate costs (if there were at all) to the customer. There was only a ceiling pegged to a daily withdrawal, using ATMs. Even if Nigerian banks are to charge their customers a la intra-bank reconciliation costs, interswitch service charges and other banking argots, I think N100 for every withdrawal is way too much for an average Nigerian customer to bear vis-à-vis the student, the market woman, the hawker et cetera who needs almost every penny to survive. It is mind-blowing to fathom the volume of transactions carried out daily via the ATMs. I hope an ignoramus like me will be spared details of rocket-science explanations that might follow this article.

Still on the cash machines matter, aside the intra-bank charges as above-discussed, some of the banks have taken a step further in the effrontery against its unsuspecting customers’ goodwill and appeal. These banks charge daily or monthly fees for ATM withdrawals. They likewise without conference to their customers knavishly charge for unsolicited SMS’s notifying their customers of any transaction actioned on their accounts.

While it is well understood that banks are not non-profit making outfits, banking should albeit be practised in a very professional and idealistic manner. Nigerian banks should desist from continuously devising means of ripping their unsuspecting customers of their deposits in trickles. Competent and professional banks make profits from core banking services and not from cunningly excogitated service charges. I wonder what happened to value-added services. If service costs are to be levied, they should reasonable, low-priced and the customers’ consent should be solicited for some of these services.

Let the real and proficient banks arise!