It has been observed that despite the embargo on staff rationalisation in banks by the Central Bank of Nigeria (CBN), lenders in the country may have no option than to disengage some of their staff.
Daily Independent found out that in an exclusive chat with Ronak Gadhia, CFA Director with EFG Hermes, the reality on ground is that banks in the country may have to show the way out to thousands of staff in due course.
EFG Hermes is a financial services corporation in frontier emerging markets. It offers investment banking services and non-bank financial services in 12 markets across four continents.
Commercial banks in the country, as if they are preparing for a huge staff rationalisation, have been rotating branches for operation.
This, according to analysts, is an indication that many staff will go.
“I believe cost rationalisation will be implemented by banks; I believe, COVID-19 and subsequent imposition of lockdowns have accelerated Nigeria’s migration to a cashless society.
“Therefore, going forward, I believe a lot of transactions that could have been carried out at the branch level will have permanently migrated to digital or other non-traditional channels (like agents) and banks will translate to downsizing of banks’ client facing staff,” Gadhia said.
He added that the effect of the COVID-19 pandemic has left the banking sector in a bad shape and hence there is no going back on the decision of some banks to rationalise.
He said: “The CBN has indicated that banks have restructured around 40 percent of their loan portfolios and indicates that figure could potentially increase to as high as 65 percent.
“It shows banks asset quality has come under significant pressure since the outbreak of COVID-19 and that will translate to lower earnings growth as banks have to make more provisions for the same.
“Earnings will also be negatively impacted by potential moderation of loan growth as banks will become risk averse in this environment; decline in fees and commissions due to decline in transaction volumes, and regulations such as the reduction in lending rates on intervention facilities funded by the CBN.”
With these, Gadhia added that the only way for the bank to remain in business is to reduce its workforce.