Employees at Deposit Money Banks are being tasked with achieving financial targets to boost their banks’ capital bases, in line with the Central Bank of Nigeria’s (CBN) mandatory recapitalization requirements.
According to inside sources at commercial banks, employees are being asked to help raise funds by encouraging customers to open new accounts, reactivate dormant accounts, and make larger deposits.
This strategy, adopted by banks classified as private limited companies, involves setting financial goals for staff across all levels, including IT personnel.
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The move comes as many banks struggle to access the capital markets effectively to raise the necessary funds.
Consequently, these banks have turned to internal measures to meet recapitalization requirements while continuing their efforts to find private placements and initial public offerings.
Afrivest, an investment management company, identifies 11 banks listed as private limited companies. One employee from a participating bank, who requested anonymity, revealed that Union Bank has set a target of N50 billion for its staff to generate through new account openings and other methods. Sterling Bank has also been reaching out to customers to reactivate dormant accounts.
Despite the challenging economic conditions making these targets seem daunting, many employees view the targets as a chance to earn additional income due to the promised incentives.
However, lower-level staff, who lack connections with high-net-worth individuals, have tended to avoid participating in these schemes.
The employee explained, “For the CBN-mandated recapitalization exercise, the bank submitted a plan outlining how it would achieve its goals.
Some banks are using a combination of internal fundraising and share sales. Banks that can’t sell shares are setting financial targets for their staff to raise funds internally.”
He added, “Union Bank, for example, has instructed its staff to bring in N50 billion in deposits. This includes not just sales or marketing personnel but also IT and administrative staff who normally wouldn’t be involved in fundraising.
While it doesn’t impact our key performance indicators, it has added a new responsibility. So far, the response has been gradual, with funds coming in slowly due to the monetary incentives.”
Similarly, other banks are employing their staff to raise funds. Findings indicate that employees are increasingly using social media to reach potential customers, given the heightened competition for capital.
Sterling Bank customer Ade reported receiving multiple calls to reactivate his dormant account, along with a customer satisfaction survey, suggesting staff pressure to reinstate old customers as part of the recapitalization effort.
Some banks have also engaged social media influencers to promote their offerings on platforms like X and TikTok.
An official at the apex bank, who is not authorized to speak publicly, confirmed that banks are permitted to use various methods to raise funds, provided they adhere to the established guidelines.
Olusoji Oluwole, President of the Association of Senior Staff of Banks, Insurance and Financial Institutions, commented that the targets set for employees are intended to ensure sustainability and encourage collective effort to meet regulatory requirements.
In profit-driven businesses, targets are a common practice. This is particularly true in the banking sector, where employees are now being assigned targets to help meet recapitalization requirements set by the Central Bank of Nigeria (CBN).
The targets for bank staff include opening new accounts, reactivating dormant ones, and encouraging larger deposits. As banks face challenges in raising capital through traditional market channels, they have turned to internal measures, setting financial targets for employees across various levels, including IT staff.
Olusoji Oluwole, President of the Association of Senior Staff of Banks, Insurance and Financial Institutions, explained, “In any profit-making business, targets are standard.
For banks to sustain operations and meet recapitalization goals, targets for account openings and share sales are expected. This is not unusual; it’s part of our survival strategy. It’s not the first time this has happened.
Institutions announcing rights issues or public offers often set targets for staff to market to their networks, including friends and family. Even stockbrokers set their own targets to earn commissions.”
He cautioned, however, that banks should avoid setting unrealistic targets. Each staff member’s capabilities should be considered when assigning these goals.
In late March, the CBN mandated recapitalization for Deposit Money Banks. According to the CBN’s directive:
- Commercial Banks: Banks with international authorization are required to increase their capital base to N500 billion. National banks must reach N200 billion, and regional banks are expected to attain a capital floor of N50 billion.
- Non-Interest Banks: For national and regional authorizations, the required capital is N20 billion and N10 billion, respectively.
The CBN’s circular specifies that only share capital and share premium on the Shareholder Fund portion of the balance sheet will be considered for this recapitalization phase.
Banks have a 24-month period, starting from April 1, 2024, to March 31, 2026, to meet these requirements through raising additional capital, mergers and acquisitions, or changes in licensing.
Recapitalization aims to boost bank capital, ensuring financial stability and enhancing lending capacity to meet regulatory standards.
