Banking On Alert. | Independent Newspapers Limited
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Banking On Alert.

Posted: Jul 12, 2016 at 2:00 am   /   by   /   comments (0)

By Magnus Onyibe.

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 -magazine- 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 imperiled 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 profit at all cost irrespective of the pains to their customers, is 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 world wide. 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 The Guardian newspaper in Nigeria , which is easily one of the most successful news outfits in the country, but is struggling to make profit, does not rake in N100,000,000 daily online even when they are providing their newspaper as a useful service. Otherwise, the media house that prides herself as the flagship of newspapers in Nigeria would not have recently sacked over one hundred staff as part of a right sizing exercise.
For folks not familiar with numeric, we are talking about N7.5 billion naira per month from half a million customers.
Could it be that having been stripped of government funds through Treasury Single Account, TSA, policy of the present regime, which used to enable financial institutions make cheap profits by lending government’s money to government 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 pummeled 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 defenseless 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.
Part of the mandate of finance committees in the legislative arm of government 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 government 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 government 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 , ” in 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 government 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 government 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 government 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 government 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.
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 outgone 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.
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.

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.
Onyibe, a Development Strategist and Futurologist, is a former Commissioner in Delta State government.