Banks’ Recapitalization Sparks Job Security Concerns: NLC, Bankers Voice Worries

The Nigeria Labour Congress (NLC) and the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) have sounded alarms over potential job losses amid the latest round of banks’ recapitalization mandated by the Central Bank of Nigeria (CBN).

This apprehension stems from historical precedents, with previous recapitalization exercises in 2005 and 2010 resulting in the loss of approximately 12,000 jobs.

Last week, under the direction of Mr. Olayemi Cardoso, the CBN initiated another round of recapitalization, marking the third such effort since Nigeria’s return to civilian rule in 1999.

The new directive stipulates that banks must meet a revised capital base of N500 billion for international operations, N200 billion for national operations, and N50 billion for regional operations and merchant banking licenses within two years.

Previous recapitalization initiatives, under the leadership of Professor Charles Soludo and Lamido Sanusi in 2005 and 2010, respectively, significantly reduced the number of commercial banks, consolidating them from 89 to 24 and then to about 20.

During these transitions, reports indicate that over 5,000 direct employees lost their jobs, while more than 7,000 indirect staff, including casual, contract, and outsourced workers, were also affected.

Expressing concern over the latest recapitalization, NLC President Joe Ajaero highlighted the adverse effects of eroded bank capital bases, particularly due to factors like foreign exchange fluctuations and government economic policies. Ajaero emphasized the need for government intervention to mitigate the impact on workers and small depositors.

ASSBIFI President Olusoji Oluwole acknowledged the benefits of increased capitalization for banks’ operational capacities but underscored the potential job security implications, especially regarding mergers and acquisitions.

As stakeholders await further developments, including the CBN’s two-year compliance timeline, concerns persist regarding the fate of bank employees and the broader economic implications of the recapitalization initiative.