NLC, Bankers raise concerns over job security in new CBN banks’ recapitalization

In the wake of the Central Bank of Nigeria‘s (CBN) directive to recapitalize the new banks, the Nigeria Labour Congress (NLC) and the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) have expressed worries regarding job security among other things.

There have been reports that similar exercises in 2010 and 2005 led to the loss of 12,000 jobs.

Daily Stand Nigeria recall that last week, the CBN, under the direction of Mr. Olayemi Cardoso, oversaw the third round of bank recapitalization since the implementation of civil rule in 1999.

With the new regulation, banks have two years to fulfil the N500 billion capital base for international activities, N200 billion for domestic operations, and N50 billion for regional operations and merchant banking licenses.

In 2005 and 2010, the CBN carried out recapitalizations under the administrations of Professor Charles Soludo and Lamido Sanusi, respectively.

The number of commercial banks dropped from 89 to 24 under Soludo’s recapitalization program, while Sanusi’s policy reduced the banks to roughly 20.

Reports state that around 7,000 indirect workers— who worked as contract, casual, and outsourced employees—lost their employment during the two exercises, while at least 5,000 direct employees lost their jobs.

In an interview regarding the most recent round of recapitalization, the NLC President, Joe Ajaero said;

“The policy of recapitalising the capital base of banks in the country is not a new one and we have all seen its consequences.

“The truth is that when the capital base of banks becomes eroded especially by the forces of foreign exchange which renders the capacity of banks to continue serving as major players in the international market and the domestic economy especially for an economy that is highly exogenously propelled, it becomes imperative that their capital base are shored up to be in sync with the objective socioeconomic realities.

On his part, President of ASSBIFI, Olusoji Oluwole, said,

“The new bank recapitalization had come to stay and it is a good development for the sector and the economy.

“At moments like this, we usually expect banks to merge or be acquired which have implications on job security.