• Monday, June 24, 2024
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Banking on alert


It is not uncommon to receive alert from your bank that your account has just been debited for all sorts of charges including unsolicited subscription to the bank’s Digest. In these very perilous times, how can bank customers, who more often than not, are illiterates, be made to pay for subscription to an in-house publication that is unsolicited for and should be free to customers who wish to avail themselves of the opportunity to interact with the bank? Can anyone in good conscience offer a camera to a blind man, even as a gift, how much less compel purchase?
That’s exactly what the banks that unilaterally debit customer’s accounts to pay for Digest -magazines- are doing to the unlettered ones among their customers. In fact, whatever happened to the simple principle or protocol of contract which is based on offer and acceptance?
Without a doubt, receiving alerts from banks for all manners of deductions are new ways that banks are applying to bilk their clients of billions of naira annually. At a financially precarious period like this when the economy is fast descending into recession and the average Nigerian is imperilled by the associated hardships,-no jobs, delayed salaries for those still working, spiking costs of living -the unscrupulous and disingenuous theft from unsuspecting bank customers  is most unconscionable.
Such act of perfidy by the banks that appear to be in manic craze to make profits at all costs irrespective of the pains to their customers, are condemnable and should prick the conscience of bank operators, if they have one.
You can imagine how much N500 monthly subscription would amount to if a bank debits such sum of money from half a million customers every month. By the way, I used a hypothetical number since l could not find useful data about the number of bank account holders in Nigeria from CBN and NDIC websites, but l found out that there are about 700 million bank accounts worldwide. Anyway, N500 debited from the account of 500,000 customers would be a cool N250,000,000 raked in from deposits by just pushing a button on a computer keyboard every month.
To make my point more poignant, consider a scenario where an online publisher has one million subscribers on a blog with each paying just N100 a day to browse. The amount generated would be N100,000,000. l can assure you that most newspapers in Nigeria struggling to make profit, do not rake in N100,000,000 daily online even when they are providing their newspaper as a useful service. Otherwise, some media house would not be owing salaries and sacking staff as part of a right sizing exercise.
A tier one bank in Nigeria actually charges customers fees in excess of fifteen thousand naira, N15000 per month for SMS alert.  Anybody that has ever sent bulk SMS to family and friends as birthday or wedding party invite can tell how cheap it is; yet banks charge customers such outrageous amount for SMS monthly. Do the maths and you will find out how scandalous the downright thievery of customers hard earned money by banks has become – N15,000@500,000=N7,500,000,000. For folks not familiar with numerics, we are talking about N7.5 billion naira per month from half a million customers.
Could it be that having been stripped of govt funds through Treasury Single Account, TSA policy of the present regime, which used to enable financial institutions make cheap profits by lending govt’s money to govt at exorbitant interest rates, banks out of desperation to sustain their over N100billion profit mark, are now seeking all means, hook or crook, to squeeze money out of their customers surreptitiously?
One good policy that Godwin Emefiele, the current Central Bank of Nigeria, CBN Governor introduced at the inception of his tenure, a couple of years ago was to ban the obnoxious fees charged customers for use of Automated Teller Machines, ATMs, but perhaps owing to pressure from bankers, the charges have been sneaked back to the detriment of the long suffering bank customers.
A plethora of bank charges in all guises are now the order of the day such that customers could have their accounts that are modestly funded go into debit and amass considerable debt, enough to land banks and customers in courts, in a space of one year due to compounding interest charges accruing into the account via illicit debits.
Commission on Transactions, COT which was also abolished by the CBN under Emefiele’s watch has returned surreptitiously in several mutations like management and maintenance fees etc, perhaps escaping Emefiele’s gaze. This is not unexpected as the embattled CBN governor has been engrossed in defending the Naira which has been heavily pummelled by the volatility in the price of crude oil in the international market now rendering the atmosphere in the financial services sector highly combustible.
Who will fight for the defenceless bank customers who are not represented at the prestigious Bankers Committee-a forum for bank chief executive officers, CEOs and the top echelon of the CBN?
How can the bank customers whose interests are not represented on the board of CBN be protected? The truth is that the bank customer has no helper in the instances mentioned above, hence the exploitation that is tantamount to economic rape, has continued unabated.
Admittedly, banks have been compelled to refund unearned income to some customers by the CBN since Emefiele took over, but it appears he would need the weight of the law from the National Assembly, NASS to achieve greater success at protecting the interest of customers.
So for the impunity to stop NASS, as the constitutionally empowered representatives of Nigerian people, of which the banking public, constitute a critical component, must act now.
Fortuitously, both the higher and lower chambers of NASS have finance committees whose members are very boisterous superintending over the annual ritual of producing appropriation bill or national budget and then go silent,until the next circle of budgeting activities.
Part of the mandate of finance committees in the legislative arm of govt is to check the excesses of financial institutions but until their recent intervention on the contract awarded Systemspec, the company that developed the software being applied in the implementation of the TSA, they have been shirking their responsibilities to protect Nigerians from undue exploitation, perhaps owing to the faceoff between the legislative and executive arm of govt since inception, about one year ago.
Even then, Parliament’s intervention in the controversial TSA collection platform only complicated matters. Instead of resolving the knotty issues, it left Systemspec in limbo as the soft ware engineering firm has been unable to reap the benefit of her intellectual property, while govt is still using the software.

To be clear, l’m not by any means railing against banks making profits as they are in business to do just that, but it’s excessive profits that l’m concerned about. So obviously, the likes of FCMB, Skye bank, Heritage bank and Sterling bank that made losses or little profits, would be exempted from the excessive profit tax.
Although banks non performing loans, NPL have sky rocketed as evidenced by First Bank of Nigeria, FBN’s provision for bad loans which is about N120b from a little over N25b last year, most banks still made huge profits in the last financial year-and some even hit the N100b mark-Gtbank, Zenithbank.
When a similar situation of excessive profits by banks arose in the UK under prime minister Margaret Thatcher’s watch, windfall taxes, also known as “fat Cat” tax to enable govt recoup excessive profits from banks, was introduced.
According to the Guardian newspaper of London article of December 9,2009, titled Windfall taxes are nothing new, the chancellor noted that , ” ln 1981 the then chancellor Geoffrey Howe introduced a special budget levy to harvest around £400m from the banks, which were seen to be escaping the pain of that recession”
In a strange twist of irony, Nigeria is on the verge of a recession and instead of govt taxing the excessive profits of banks that ‘are not feeling the pain’ like the rest of the industries in the economy, which prompted Thatcher’s profit tax in the UK, reverse is the case in Nigeria where govt funds were withdrawn from money deposit banks, DMBs via the introduction of TSA ostensibly to stop banks creaming off the deposits from further doing so. More like cutting off the nose to spite the face.
In the absence of cheap govt funds, nefarious bank are now creaming off on deposits of their already sapped customers.
Apart from targeting banks excessive profits, in 2009, fabulous bonuses for banks executives became the cause of concern to authorities in the UK, so they were taxed accordingly as a way of achieving equitable income distribution and extending the good fortune to the rest of the society
To achieve the objective ,authorities in the UK produced a 60 page report making the case for a so called transaction tax on a city trading, and an insurance scheme to stop tax payers from being forced to foot the bill for any future banking crises.
Remarkably, a version of that policy has been adopted in Nigeria as banks are now mandated to pay a portion of their profit to AMCON- also known as the Bad Bank-to underwrite the risks against future banks failure and also to recoup the bank bailout funds which saved banks from collapse in 2008.
What this implies is that govt is taxing bank’s profits to generate funds to shore up the financial services system in order to prevent banks from failing which is why AMCON was set up.
In fairness ,Nigerian banks were barred from passing the costs to customers via charges in any guise, but costs of alerts that could grow to as much as N90b annually from half a million customers, may be a clever way of getting back with the left hand, what banks give to AMCON as tax with their right hand.
In another Guardian newspaper of UK article, titled  ‘Mandelson: bonus tax not designed to teach bankers a lesson’ business secretary Lord Allison Mandelson defended the one-off tax that was imposed on bank bonuses thus: “l know some people think that the banks have brought this on themselves and that we just ought to teach them a lesson. That’s not the frame of mind that we are in.
“We want them to become profitable again. But people do have to understand that people will be very disconcerted, very disappointed to see the return of excessive bonuses we have seen in the past”.
Worryingly, unlike the UK, taxing bonuses of bank executives and owners is not the trend in Nigeria.
However, banks have recently taken some ‘hair shaves’ – profit losses-following the massive ‘head winds’-operational challenges -induced by unfriendly govt policies like the TSA and the nasty spats that some banks CEOs had with anti graft authorities tracking funds allegedly stolen and lodged in banks by politically exposed people, PEP implicated in the anti corruption war being prosecuted by current administration.
Nevertheless, banks still managed to scrape through, although some Chief, CEOs were clamped in jail for a couple days to compel them to divulge details of the suspected stolen funds stashed away in their banks by financial suspects.
A recent survey of executive pay in the banking industry indicate that  from CEOs to executive directors, revealed that their emoluments range from  N80-100m per annum , which is quite ‘handsome’ and does not reflect the distress in the economy that has left salaries of civil and public service workers unpaid for several months in about 27 states of the federation.
A particular point of concern is that, while it is mainly banks like First bank, FCMB and Diamond bank that are bullish in granting loans to the general public that have suffered reduction in profit or made losses in the out-gone financial year, the banks that don’t grant loans to the public but trade mainly on treasury bills and bonds as well as occasionally advance loans to only blue chip companies like Nigerian breweries, Guinness and Nestle, to the detriment of SMEs made huge profits.
What happened to sectoral allocation of funds by the CBN in the days of yore when incentives were given to banks that funded agriculture the most? Is it against the grain of free enterprise and if it is, how can regulatory authorities ensure that banks are more democratic- spreading their loan portfolio across a broad spectrum- as opposed to being tyrannical-discriminating against retail banking- in their loan disbursement to ensure that SMEs which are the main generators of employment in any economy are not continuously starved of loans by banks as is presently the case?
Regarding dividend pay outs from banks huge profits , most owner managers also cart away billions of naira annually, while the businesses-factories etc that they generate income from are folding up.
In conclusion, consider the innocuous scenario below which can go on unnoticed over a long period: assuming a fraudulent bank ledger clerk deducts one naira daily from the account of 500 bank customers surreptitiously for one month without being detected. That would be N15,000 per day. If he/she gets away with it for one year and resigns ,that would be at least N180m, applying a straight line  calculation of 30 days a month and by including everyday not withstanding whether it’s public holiday, Saturday or Sunday. Such a low level bank thieve won’t have to engage in white or blue collar jobs anymore.
Is that not mind boggling?
Such is the kind of silent heist that banks have been pulling off on their unsuspecting customers and it should be of great concern to legislators who should take their oversight functions more seriously and fast track the activation of the whistleblower law. By the same token, the executive arm of govt should step up harnessing benefits accruable from sanctions on erring banks to boost provisions for enhanced social security and safety nets for the poor and vulnerable, as it is currently doing via the recently introduced feeding of school children daily being driven from Vice President, Yemi Osinbajo’s office.
For one year, president Buhari’s zero tolerance for corruption has been focused on high profile politicians, oil/gas barons and the honchos of the banks that had custody of the alleged misappropriated funds, while allowing the ‘petty’ frauds in the banks and society at large to fester.
If illicit deductions from depositors accounts, of which customers are only notified via alerts are allowed to go on unabated, then it would be assumed that it’s either because CBN inspectors are sloppy or complicit.
For an all encompassing anti fraud war, it’s about time president Buhari started paying attention to the so called petty fraud which is also very endemic in Nigeria.
The restriction of the anti corruption campaign to the ‘top guns’ perhaps justifies the criticism that president Buhari may be wining the anti corruption battle but not the war because, the massive level of bribery going on at the customs service, police force, immigration and civil service generally, classified as the so called petty fraud, is huge and cumulatively as debilitating as the corruption perpetrated at the top.
The reason it is important to tackle corruption at the bottom as it is being done at the top, is because those who become mega thieves tomorrow, most probably were once petty thieves yesterday.

Magnus Onyibe

Magnus Onyibe, a development strategist and futurologist is a former commissioner in delta state govt and an alumnus of the Fletcher School of Law and Diplomacy, Tufts university, Medford Massachusetts, USA.