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Crisis in banks absence of “whistle blowers” — Labour

By Victor Ahiuma-Young

•Urges CBN to empower, strengthen its surveillance activities

ORGANISED labour in the nation’s financial institutions, weekend called on the Central Bank of Nigeria (CBN), to further empower and strengthen its surveillance activity of the banking sector to enable it detect/prevent future occurrence of  crisis of confidence and perceived misconduct that is currently rocking the nation’s banking sector.

Under the umbrella of National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), labour also implored the CBN to encourage bank managements not to inhibit employees’ right of association and freedom of expression, arguing that lack of these fundamental ingredients has also contributed to the impunity of unethical and management recklessness in the sector.

President of NUBIFIE, Comrade Adeleke Hassan, in a statement lamented that because  Nigeria banks operate under a gagged atmosphere, it has become extremely impossible or at best risky for whistle blowing by employees.
He argued that N420 billion public funds deployed to stabilize the affected banks should be transparently and judiciously applied for the purpose it is meant, either the conversion of the funds to shares, in an open process and equal access to investors (Nigerians or foreigners).

Comrade Hassan posited that  offer of such shares or indication of interests by investors should be carefully scrutinised to prevent other set of cabals hijacking these banks which is not the intention of CBN.

According the statement: “We also believe that Central Bank should encourage management not to inhibit employees from exercising their right of association and free expression of opinion, as lack of these fundamental ingredients has also contributed to the impunity of unethical management recklessness under a gagged atmosphere where it becomes extremely impossible or at best risky for whistle blowing by employees.

While it is inauspicious to apportion blame on these matters, however, it would only be fair to do some soul searching by all regulators in thefinancial sector given the fact that all these unethical activities happened under their collective watch. While commending the Central Bank of Nigeria for the bold initiatives, it said it should further empower and strengthen its surveillance activity of the banking sector to enable it detect/prevent future occurrence of these problems.”

“We all know banks must give out loans in order to survive but, in doing so, it must undertake some reasonable level of evaluation or risk assessment of the venture or enterprise for which the loan is meant. But, however “reasonable” or “expert” risk assessment there is to a loan, other external factors often determines the performance or success of loans, especially in our environment with high degree of institutional failures and systemic anaemia, a net negative impact on businesses and the economy in general.

While we acknowledge government concerted effort in addressing the infrastructural challenges of business environment, nonetheless, we recognize that these challenges are not only a big factor in what has gone wrong in the banking industry but, in itself creates distortion and inefficiency which in the final analysis provides cover for deep rooted abuses in the system. Post consolidation; there were huge funds at the disposal of these banks, most of which were sourced at the capital market through public offers. Some banks have even gone to the public twice to source for funds through private placement/public issues.

Granted that post consolidation most banks embarked on ICT/Infrastructural upgrading of their branch networks with huge capital outlay. In post-consolidation, we have seen banks declaring mega-profits despite huge operational/recurrent expenditure costs and, paradoxically, against a dying real sectors of the economy. Of course, there has been so much disincentive against taking loans by entrepreneurs and other business from the banks, among which are the cost of funds (high interest rate) and as earlier stated, infrastructural challenges, among other factors.


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