January 20, 2010
The present practice of denying laid off bankers their severance package by paying it into their loan accounts is not only unethical, but suggests that we are yet to learn to respect banking rules. This practice is nauseating, and has to be stopped.
The present practice of denying laid off bankers their severance package by paying it into their loan accounts is not only unethical, but suggests that we are yet to learn to respect banking rules. This practice is nauseating, and has to be stopped.
Losing one’s job is bad enough, forcing the jobless to pay off a term loan that was offered, and accepted based on the written understanding that payment will be spread over several years is a classic example of adding insult to injury. That Nigerian bankers have been living with this practice does not make it right, and it has to stop.
I call on the CBN to force all the banks that engage(d) in this practice under the Sanusi Lamido Sanusi CBN era to reverse their actions, and pay their laid off staff their due.
I also call on human right lawyers, affected workers, and those that believe in fair practice to institute class-action suits against these banks, even after they may have reversed themselves, as a lesson for the future, and consideration for the pains and suffering inflicted on our unfortunate compatriots.
To more properly understand the issue, especially for Nigerians outside of the banking sector, here is a classic example
A year ago, a friend was enticed, practically cajoled into taking out several personal loans. Although he was a bank inspector, the deputy general manager in charge of the Victoria Island private banking unit saw to it that he took loans to buy a new car, (and from the bank’s preferred seller), in support of the branch’s marketing effort. He was also pressurized into selling the bank’s shares, unable to find enough willing buyers, he simply took out more loans to buy the minimum volume allotted to him, what else could he do? Today, the bank’s share is trading at less than 20% of the boom price.
When a bank staff accepts a term loan of N4.5million Naira at a 10% interest rate, with a view of paying a little less than N150,000/month over 36 months, he should not be made to pay any more in a month because he lost his job, after all, other borrowers that lost their jobs with non-bank employers received their severance pay, why should the bankers be made to suffer unduly because their present/former management mismanaged the company?
articleadslinks
When banks offer their staff term loans, it was with the understanding that the loans will be repaid over a period of time, just like mortgages, car notes, etc in the West. The staff accepted your loan terms including management, transaction, and all forms of fees and insurance costs under the premise that over the life of the loans; 36-60 months, he would be alright, then, he gets laid off by you, and without regards to your upfront fees, and other related costs already recognized as profit in your books, you demand the full loan amount back, and as if firing the staff for the sins of the management team (present or past) was not enough, you collapse his/her severance package into his/her loan account, not because you are in the right, or in line with the terms of your loan offer letter, but simply because you can get away with such inhumane act, what a country.
You do not have the right to demand full repayment of a term loan without giving the borrower an agreed time frame to respond to your demand, and you do not have the right to take back an ex-staff’s severance package under the pretext of indebtedness to the bank especially when the borrower has never defaulted on his payment.
articleadslinks
There is a world of difference between taking steps to keep loans in good shape and violating the rights of your customers/staff. Many laid off workers can so easily use their severance packages to set up shops that will repay their indebtedness over time, deposit the same severance package in a bank and service their monthly payment with the monthly interest, take care of their family while servicing their loans for a short period during which he hopes to find new employment, even defaulting temporarily until such time when they can resume payment.
Making out staff loans in good times to pump up your share prices, increase earnings through interest and fee incomes can only come at the risk of the loan, or some of it going bad, but to eat your cake then turn around to have is the type of unethical practice that we must discourage.
Hopefully Lamido Sanusi and the legislative arm of government will pass laws barring the banks from this practice, which should be retrogressive just like the new CEO rule in order to soften the pain of recently retrenched bankers. For a country that can’t afford to pay unemployment benefits, this is a great opportunity for the senate to pass a pro-Nigerian people law.
Okwy Okeke can be reached at [email protected]
articleadsbanner
Losing one’s job is bad enough, forcing the jobless to pay off a term loan that was offered, and accepted based on the written understanding that payment will be spread over several years is a classic example of adding insult to injury. That Nigerian bankers have been living with this practice does not make it right, and it has to stop.
I call on the CBN to force all the banks that engage(d) in this practice under the Sanusi Lamido Sanusi CBN era to reverse their actions, and pay their laid off staff their due.
I also call on human right lawyers, affected workers, and those that believe in fair practice to institute class-action suits against these banks, even after they may have reversed themselves, as a lesson for the future, and consideration for the pains and suffering inflicted on our unfortunate compatriots.
To more properly understand the issue, especially for Nigerians outside of the banking sector, here is a classic example
A year ago, a friend was enticed, practically cajoled into taking out several personal loans. Although he was a bank inspector, the deputy general manager in charge of the Victoria Island private banking unit saw to it that he took loans to buy a new car, (and from the bank’s preferred seller), in support of the branch’s marketing effort. He was also pressurized into selling the bank’s shares, unable to find enough willing buyers, he simply took out more loans to buy the minimum volume allotted to him, what else could he do? Today, the bank’s share is trading at less than 20% of the boom price.
When a bank staff accepts a term loan of N4.5million Naira at a 10% interest rate, with a view of paying a little less than N150,000/month over 36 months, he should not be made to pay any more in a month because he lost his job, after all, other borrowers that lost their jobs with non-bank employers received their severance pay, why should the bankers be made to suffer unduly because their present/former management mismanaged the company?
articleadslinks
When banks offer their staff term loans, it was with the understanding that the loans will be repaid over a period of time, just like mortgages, car notes, etc in the West. The staff accepted your loan terms including management, transaction, and all forms of fees and insurance costs under the premise that over the life of the loans; 36-60 months, he would be alright, then, he gets laid off by you, and without regards to your upfront fees, and other related costs already recognized as profit in your books, you demand the full loan amount back, and as if firing the staff for the sins of the management team (present or past) was not enough, you collapse his/her severance package into his/her loan account, not because you are in the right, or in line with the terms of your loan offer letter, but simply because you can get away with such inhumane act, what a country.
You do not have the right to demand full repayment of a term loan without giving the borrower an agreed time frame to respond to your demand, and you do not have the right to take back an ex-staff’s severance package under the pretext of indebtedness to the bank especially when the borrower has never defaulted on his payment.
articleadslinks
There is a world of difference between taking steps to keep loans in good shape and violating the rights of your customers/staff. Many laid off workers can so easily use their severance packages to set up shops that will repay their indebtedness over time, deposit the same severance package in a bank and service their monthly payment with the monthly interest, take care of their family while servicing their loans for a short period during which he hopes to find new employment, even defaulting temporarily until such time when they can resume payment.
Making out staff loans in good times to pump up your share prices, increase earnings through interest and fee incomes can only come at the risk of the loan, or some of it going bad, but to eat your cake then turn around to have is the type of unethical practice that we must discourage.
Hopefully Lamido Sanusi and the legislative arm of government will pass laws barring the banks from this practice, which should be retrogressive just like the new CEO rule in order to soften the pain of recently retrenched bankers. For a country that can’t afford to pay unemployment benefits, this is a great opportunity for the senate to pass a pro-Nigerian people law.
Okwy Okeke can be reached at [email protected]
articleadsbanner
googletag.cmd.push(function() { googletag.display('comments'); });
googletag.cmd.push(function() { googletag.display('content1'); });
googletag.cmd.push(function() { googletag.display('content2'); });