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« Open Letter to Obasanjo: President of the Federal Republic of Nigeria | Main | Where do we go from here? »

February 08, 2005

Banks, Women, and Corporate Irresponsibility

Uche Nworah: In Nigeria, they are all over the place, in their skimpy and plaid knee length skirt suits, their smiles are whiter and brighter than that of the Macleans’ man, their faces glow from the thick layers of mascara cosmetics which is not enough to conceal their pain and frustration.

You can never mistake them in their branded Dubai Hondas and shiny air-conditioned cars; you will see them usually perched on the owner’s side, with their faces buried in broadsheet newspapers on their way to look for money, or to ‘market’ potential customers. It is the personae the banks want you, the onlooker and potential customer to see; life is good for these bank girls, so do the uninitiated assume but is it?

Not if you have a target of hundreds of millions of Naira to bring in and you fail, your job goes on the line. The code red is for the young women to do whatever is required to meet their targets, if they wriggle out this month with some excuse for not meeting the target, there is the next month to think of as well, it is a heart wrenching job.

The working hours are nightmarish, in an unsafe country like Nigeria with epileptic transport situation, some of the women are known to come back home as late as 11 PM or even later, these women are loosing out on the home front as well, they no longer have the time to care for their children nor for their husbands. Relationships and marriages are breaking down and the banks are smiling, and declaring Billion Naira profits.

The women do not have too many appealing options; it is only the banking sector that offers any real employment hopes. Soludo, the CBN governor should not let this go on for long, his clean sweep of the banking industry should also touch on this issue of fund soliciting. It does not matter in what culture it is practiced, soliciting is morally wrong, the banks can not claim that they do not know that their female employees get into all sorts in other to bring home the goods. This issue is still on going and I will eventually come back to it in the future.

My main grouse at the moment is with the capital market activities of Nigerian banks, I think that the Central bank can not effectively regulate the industry and the entire financial services industry, there are obvious conflicts and inefficiencies. The CBN’s regulatory arm should form a separate entity just like the Financial Services Authority (FSA) in the UK. The CBN should only be concerned with fiscal and monetary policy issues, just like the US Federal Reserve and the Bank of England. The weaknesses in the regulation have given rise to the manipulation of investor funds by some of these banks.

For example, Nigerians heralded the rights issue of Zenith Bank and Guaranty Trust Bank in July 2004, the two banks employed effective marketing strategies to convince potential investors to buy their shares, news reports showed that their campaigns were effective as the shares were oversubscribed.

I was visiting Nigeria at the time of the Zenith Bank and GTB rights issue and had convinced friends and family to invest in the shares, this was also our way of responding to the various calls for Nigerians in Diaspora to come home to invest, Now since we bought the shares of the said banks, only Zenith Bank has fulfilled part of it’s contract, they have issued our certificates and have also posted them to our various addresses abroad.

It is a different matter with GTB, it has been one tale after the other, currently the bank’s shares have been suspended from trading at the Nigerian stock exchange. If there were stricter corporate governance in Nigeria, or if the bank’s Regulation, Compliance and Legal departments had done their homework, investor’s funds would not have been locked away in their vaults this long without yielding any dividends or interests. Such callousness will cost employees their jobs in the developed countries, because of the collateral damages, including loss of image and payment of compensation claims which the financial institutions may suffer.

The official reason for the suspension is GTB’s announcement that it was going to acquire Inland Bank plc, I don’t know the logic behind announcing such deals hastily when the parties concerned have not yet tidied their books, normally where there is strict corporate governance, such announcements that are bound to affect and influence share prices and trading are first cleared with the security and exchange commission before making it public, GTB did not do this, and so the Central Bank or the SEC suspended their shares from trading at the Stock market.

So what happens to the investors? Are we going to be compensated for the period of inactivity of our investments? We really should and the regulatory authorities should consider this aspect as well in the whole process. My argument is that if we had placed the funds in fixed deposit accounts in GTB for these 7 months, the accruing interests would have been huge.

Now my aunt who labours as a nurse in America has been on my case because I had sold the whole share idea to her, she has not been to Nigeria in a long while choosing instead to bury herself in her work. She is particularly angry that she gave me almost all her savings to invest in GTB, I had based my advice on GTB’s web advertisements and boasts of earnings of over 140% by it’s previous investors.

I am still waiting to hear the last word on this matter, both from the CBN, the SEC, the NSE and the GTB, I am sure other Nigerians who had invested in GTB’s shares are waiting as well. I just don’t want to believe that GTB investors should be sitting ducks in this whole mess. This is a classic case for the Nigerian Shareholders Association and the other consumer rights associations to pursue vigorously.

I suggest a class action suit against the bank and the authorities; we deserve some kind of compensation for their error of judgement, recklessness and corporate irresponsibility. They may also consider compensating us using prevailing interest rates for the period our shares have been idle. Any one reading this who wants to take this suggestion further can contact me.

The authorities need to restore confidence in the capital market once again; current investors should be protected if potential ones can be expected to come into the market. There should be no sacred cows at all.

Martha Stewart, the queen of American home living is currently serving a 5 month jail sentence in a West Virginia prison, she is doing time having been convicted of insider trading offences. We need these kinds of resoluteness in the system to restore investor confidence.

High profits and greed drive some of these banks, what else would make a bank like Fountain Trust Bank turn a blind eye to Tafa Balogun’s alleged deposits, did they not know that the funds must have been stolen public funds? I know that there are legal and ethical requirements and compliances which stipulate that banks should report deposits in excess of certain amounts to the authorities but how many of the banks do this?

Also, the current money laundering charges brought by the EFCC against some senior executives of Liberty Bank and the All States Trust Bank at the Kaduna High Court shows that there is indeed a crisis of confidence in the Nigerian banking sector.

Customers of banks and other financial services have always had it rough in Nigeria, starting from the days of Forum Finance in Lagos and Ime Umanah’s Resources Managers in Port Harcourt, both being financial services enterprises that failed and swallowed consumer’s deposits as a result of weak regulation. The trend also continued with the failed bank saga of the 1990s but we can not go on like this.

The GTB situation calls to question the issue of leadership and succession in the Nigerian banking sector, it may seem that since Fola Adeola who founded the bank left to pursue other interests including setting up the Fate Foundation, the current GTB executives may have lost the original vision and concept, or else newer upstarts in the industry would not have overtaken GTB’s pioneering position.

STB, Diamond Bank and Zenith Bank should be wary of going down this route when Tony Elumelu, Jim Ovia and Pascal Dozie all call it a day

Posted by Administrator at February 8, 2005 07:47 AM

Comments

women's rights should be protected from the sham called the banking industry in nigeria.that industry doesnt exist in nigeria what we have is a poor imitation where non professionals dominate the scene simply because they have rich god fathers who can give them a ride on the shoulders.the CBN should look into it.and disregard Mrs. Ndi Okereke-Onyuike,director of the NSE who accuses them of over-probing.there is no such thing as over-probing.

Posted by: itose okosun at June 29, 2005 04:47 PM


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