In his convoy of six other vehicles were the ‘big wigs’ of Oceanic Bank in Abuja and environs, who participated in harassing people off the road on that day. I was humbly driving myself, feeling ‘ghetto fabulous’, like the Americans like to say, and minding my own business when these people, most of whom are far my juniors in the banking industry came and pursued me from the road in a show of undeserved importance. This could not be the new agenda for banking, or can it? These new MDs could not have been recruited to perpetuate the same insanity that drove the banking industry aground or could they?
Malam SLS could not have approved this level of cockiness, could he? In fact, I hope the lucky chaps who have ‘inherited’ the cockpit of the bad banks have been properly briefed. I hope they know the enormity of the task they have on hand. I hope there is a goal towards ultimately cleaning the industry. For if there isn’t, they will undermine every good intention of the regulator. The cowboy, Hollywood star approach is exactly what has put us where we are today. Some of the deposed MDs used to have bodyguards running besides their jeeps as if they were the president. That is the beginning of private jet acquisition and utter madness.
So I put together some pieces of advice for the new managers. The advice is given from a number of perspectives. Firstly from being an ex-insider, or perhaps still an insider, and secondly from a much broader perspective as someone who has conducted tremendous research in the area of banking and finance in the last few years. The advice may be specific to the situation that the five axed banks have found themselves, and may also be worthy of adoption by the industry at large.
The first issue the banks need to fix, now that they’ve been offered a lifeline, is their expense profile. Most of them had been spending unnecessary amounts on advertisements that gave no mileage. Nigerian banks were an embarrassment on CNN and other foreign networks. Whereas those networks enjoyed the monies thrown at them by the Nigerian banks, everybody else wondered what gold the Nigerian banks were mining, in a backwater, sick economy like Nigeria. Now all that expense must be cut, and all expense lines critically reviewed to determine if there was value added. In the same vein salaries and bonuses must be reviewed and expectations managed downwards. Some banks boasted before now about how their trainees drove Honda Accord 2009 cars around. Those cars cost about N6million or so. There is no way trainees could have deserved such luxury at the beginning of their careers.
I remember talking to the Treasurer of an International Bank some time bank in London. He was amazed when some Nigerians were telling him of bankers and official cars in Nigeria. As a treasurer with over twenty years banking experience, official cars was just not on the cards. The frivolity of the Nigerian banks is just too much and out of this world. As we all complain about recklessness in government, we should take a look at ourselves as private sector people and see just how far out we’ve strayed when compared with global best practices. No one is saying senior bankers should not get official cars, cut three, four exotic cars? Too much for customers to bear.
Second, Nigerian banks should revert to the relationship management mode. In our time (and that shouldn’t make the reader think I’m a Methuselah), staff in the marketing department were allocated about twelve to fourteen accounts which they cared for and grew. Later on cowboys strayed into banking and account management became a free-for-all, numbers game. Then we used to have ‘Relationship Manager’ printed on our cards. Now it’s simply a brash ‘Marketing’ on the cards, underlining the fact that the customer has become mere numbers in the bank’s system. Bank marketers now have 3,000 accounts on their CABAL which only they ‘manage’. There’s no way these accounts can get the needed attention and grow with these officers.
The relationship management mode is the only option for the Nigerian banking industry and for the economy at large, what with the mistakes that have been made recently. Already, I was let down when the new Union Bank MD was talking about ‘marketing’ as the way to go. No Ma’am. If our banks do their business the way they should, transactions will generate cahsflow themselves and we won’t have young girls and boys flooding the streets, overheating the system, confusing people to part with hard earned cash, and generally selling themselves cheap. These bank staff have been begging for someone to save them from such a terrible fate.
Thirdly is the issue of risk management. The world at large has recently learnt serious lessons on this matter, especially with the miscalculations regarding sub-prime crisis. Nigeria seems to have largely ignored what went on in those economies, preferring instead to believe it was immune. Now with the publication of some of the most bizarre banking transactions ever seen in history, it is evident that risk management skills must be ramped up in all our banks. Risk management at the end of the day is really about conservatism and common sense. It is not about buying the latest and best software which conjures a percentage for you. There’s no off-the-shelf packages that can solve everybody’s problems. It’s about doing the right thing; lending to those with capacity and credibility to repay, monitoring such transactions and ensuring that there is no conflictsof interest or fraud from either side (customer or bank).
