Economic crisis: We won’t bail out banks with public funds – FG
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.
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 SON 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 emphasising 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.
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