New banking model: Banks may close branches

By Stanley Opara

Monday, 18 Oct 2010


There are strong indications that some Deposit Money Banks may close their branches, whose outputs are sub-optimal under the revised banking model.

Our correspondent gathered that this might not be unconnected with the directive of the Central Bank of Nigeria that they should concentrate on their areas of core competence.

The Registrar/Chief Executive, Association of National Accountants of Nigeria, Chief Terkaa Gemade, who spoke to our correspondent on Saturday, said the closure of branches would be as a result of the drop in demand for manpower in the banking sector.

He said workers in the banking sector were employed to address specific tasks, and in a situation where the activity level in the sector dropped, there would be high level of redundancy of manpower capacity.

Gemade said with the Central Bank of Nigeria reversing the universal banking model, many banks would have to cut down on operations in some areas, noting that it would make economic sense if the banks decided to discontinue or cut short on activities in the affected areas.

”The banking industry, generally has been overstaffed. For retail banking alone, most banks have excessively employed workers.

”With the reconsolidation exercise of the sector and the increased level of awareness among the populace, it is now not necessary for banks to keep so much people in the system,” the ANAN Registrar said.

According to him, the initial structure in the banking system over the years, had led to most members of staff of the banks being redundant.

However, the Managing Director, Personal Trust Limited, Mr. Anthony Owuye, said the contraction of activities in the banking sector was normal given the new developments on the ground.

He said there was no way the suspension of the universal banking model would not affect the status quo and thwart the present mode of operation in the sector.

Owuye, therefore, called on the government to make necessary provisions for the sector in view of the challenges ahead.

He said government should further expand the economy to facilitate mobility of labour.

Citing the recent closure of some microfinance banks, he said contraction in the financial sector was imminent, noting that necessary cushioning measures should be put in place to prevent any form of complications.

Owuye said, ”The economy is shrinking. If anybody wants to shrink the economy from one side, there must be provisions to expand same from another side.”

Source: Punch

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