Economic Crisis: We Won’t Bail Out Banks With Public Funds — FG

Central Bank of Nigeria Headquarters, Abuja

The Federal Government has ruled out any possibility of providing bailout funds to banks to boost their operations, following the gale of job losses in the banking sector in the last two weeks.

The Punch report continues:

A top government official told one of our correspondents on Saturday that it would be wrong for the government to bail out the banks with pubic funds because all the other sectors of the economy were faced with one challenge or the other.

The official, who spoke on condition of anonymity as he was not permitted to comment officially on the matter, said if the government announced any bailout for the banking sector, all other sectors of the economy would start requesting for their own package.

According to him, the government does not have enough funds to finance its operations, therefore, bailing out any sector will further compound the current economic situation in the country.

The source said, “We all know that this government is seriously looking for money to finance its operations.

“So, can a government that is looking for money and that is also struggling to pay its workers’ salaries be able to provide a bailout for any sector? Where will such money come from? I can tell you that such is not currently feasible.”

The Special Adviser on Media to the Minister of Finance, Mr. Festus Akanbi, also said the option of a bailout for the banks was currently not on the agenda of the government.

“As we speak now, there is no plan to provide bailout funds for the banks. We are not considering such an option currently,” Akanbi simply said and declined further comments.

No fewer than 1,400 workers have been sacked in the last two weeks by banks in response to the challenges in the nation’s economy, which have led to most of the financial institutions to record declining profits.

The Punch had reported that Ecobank Nigeria sacked over 1,040 of its employees, while Diamond Bank and Skye Bank also retrenched 200 and 175 members of their workforce, respectively.

FBN Holdings, the parent company of First Bank of Nigeria, had earlier said it would prune the number of its employees by 1,000.

Following the gale of job losses, the Federal Government, through the Minister of Labour and Productivity, Dr. Chris Ngige, had directed the banks to stop the retrenchment exercise.

The minister further directed that all the retrenchments done in the past four months should be put on hold pending the outcome of a proposed stakeholders’ summit for employers and employees of the banking, insurance and financial institutions scheduled for the first week of July.

Ngige’s directive to the banks had fuelled speculations that the government might be thinking of a package to cushion the impact of the withdrawal of funds through the Treasury Single Account from the banking sector.

The Minister of Budget and National Planning, Senator Udo Udoma, had while speaking shortly after the Federal Executive Council meeting on Wednesday, said the recent appeal by the government to the banks not to sack workers was based on the conviction that by the time the economy picked up, the banks would need the workers again.

He said the government was convinced that the economy would pick up soon and the banks would need the workers again.

Udoma said, “With regards to the plea to the private sector (not to sack workers), it is because we know that by the time the economy picks up, they will need those people again.

“We know the economy is going to pick up and we are confident about that. That is because of our plan; the plan was conceived because we knew that this was the trajectory we will move into.”

Meanwhile, the National Union of Banks, Insurance and Financial Institutions Employees said on Saturday that it would not overlook the recent sacking of about 1,400 of its members.

The union said it was about concluding plans to picket the branches of the three banks nationwide.

The union said following a meeting of members of its executive committee, letters had been written to the management of the three banks asking them to recall the affected workers or invite NUBIFIE for negotiations on redundancy, if recalling the affected staff was inevitable to their survival.

The General Secretary, NUBIFIE, Mr. Muhammed Sheik, who stated this position in an interview with one of our correspondents, said should the affected banks failed to respond to the two options, the union would not hesitate to proceed on the picketing of their branches nationwide.

He said, “The matter of the sacking of about 1,400 employees by three banks is not over yet. Certain actions taken in violation of extant labour laws must be reversed. We have told the banks that those who have not sacked should not do so, and that those who have sacked should reverse the action.

“In our letters to them, we also told them that if the sackings made in the last two weeks are inevitable, they should invite the union for negotiations in line with redundancy rules.”

Asked whether the union had set a specific timeline, Sheik said, “We are sceptical of putting a deadline. Before the end of next week, we may decide to picket one or two of the three banks. We don’t need to give them any notice again before doing that.

“We will begin this picketing by ourselves or involve our partners in the civil society group.”

Speaking on recent engagements between the union and the affected banks, the NUBIFIE general secretary said, “Already, Ecobank has started engaging us in talks and we have sent a proposal on redundancy to them but they have not responded to that. Diamond Bank and Skye Bank have yet to respond. They either bring back the people or negotiate redundancy.”

Sheik said the union was calling on all affected bank workers to visit its secretariat to furnish it with relevant information for possible negotiation on redundancy should the banks prefer the option.

According to him, a situation where financial institutions usually sack their workers in times of economic downturn or whenever their businesses are affected by government policies without following extant labour laws will no longer be tolerated.

While emphasizing that sacking of employees was not a permanent solution to the economic challenges and government policies, Sheik said the unfolding situations in the country called for innovation and new strategies on the part of the banks rather than sacking of employees.

The Director-General, Nigeria Employers’ Consultative Association, Mr. Segun Osinowo, could not be immediately reached for comments on the development via his telephone lines.

Our correspondent gathered he had travelled out of the country.

Osinowo had earlier said banks, like every other employer of labour, had the right to hire and fire.

But Ngige warned on Tuesday that the Federal Government would sanction errant banks because it had a duty to protect jobs in this harsh economy.

Ngige said, “We will go a step further if they continue. We know what to do. After all, the banks have the licences given by the government. We know what to do. They need to comply. They need to come to the negotiation table.

“Section 20 of the Labour Act says it. You must call the unions and discuss with them. You don’t just treat them as slaves in their own country and you want us to keep quiet. We want them to maintain the status quo. As far as I am the minister of labour, I will protect the interest of workers; same to the telecommunication companies, they are also talking about compiling lists without discussing with anybody.”

The Bankers’ Committee of the Central Bank of Nigeria had on Thursday said the mass sacking in banks would be reduced in the shortest time possible.

It noted that while it was working on how to reduce the level of job losses in the sector, there would always be reasons why people would have to be sacked from their workplaces.