Banks Behaving Badly

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Paul Nwabuikwu

The other day, a friend described Nigerian banks as “conscienceless shylocks”. He wasn’t the first to do so and he certainly won’t be the last. But he was both right and wrong.

The description, broadly speaking, is accurate to the extent that Shylock, the money lender immortalized in Shakespeare’s The Merchant of Venice has become some kind of universal reference point for wickedness perpetrated by people in the money business. But my friend was also wrong or, perhaps he was more wrong than right outside this broad parameter.

Calling Nigerian bankers shylocks is unfair to Shylock despite his well-documented meanness. The method chosen by the infamous money lender for getting his money back – literally excising a pound of flesh from the defaulting borrower – was morally indefensible. But, unlike Nigerian banks, he was right on two counts. First, the money was his. Second, his bloody demand was within the terms of the contract.

You cannot say the same of our banks in their daily assaults on legality and good conscience at the expense of customers whose only crime is handing over their hard-earned money for safekeeping. Compared to most of our banks, Shylock was an epitome of ethical uprightness and propriety.

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The trending story of a young lady who was captured crying in a video inside the banking hall of a Zenith Bank branch in Lagos is sadly typical. Chiamaka Agim who identified herself as a former staff of the same bank claimed that N4m – all of her life savings – was “fraudulently” taken from her personal account and transferred within minutes into accounts in two other banks on January 9 without her authorization. The account, she said, was actually opened by the bank when she was in their employ. The fact that the fraudsters were able to steal the money in three tranches despite the N200,000 daily limit on the account speaks volumes and doesn’t inspire confidence in the efficacy of the bank’s processes and online security system.

The words of the young lady capture her grief, confusion and sheer hopelessness: “I am going to die. I am sure I won’t be able to survive this. I need help. I don’t have any other money. I trekked to that bank and I trekked back… I haven’t been able to eat since this thing happened. I don’t know what else to do…”

It is enough to melt hearts. But the hearts of Nigerian bankers are made of sterner stuff. The bank has responded with a press release full of corporate-speak which, predictably, is an effort to deny responsibility. It claimed that the payment out of Agim’s account was made via a token. Agim says she has never applied for a token or issued one. Summarized, the message in the bank’s two-page statement is clear and stark: “The fault is yours, not ours, but if you can obtain a court order, we can help you recover a small part of the money – if you are lucky”. It’s a cold-blooded performance that would have shocked Shylock and even embarrassed that master of abdicated responsibility, Pontius Pilate.

The bottom line is that in the absence of effective public and regulatory pressure on the bank, the distraught young woman is on her own. Dispossessed and abandoned, she is just another statistic in the unofficial war that Nigerian banks are waging against powerless customers. This is not to say that powerful customers cannot become victims. But they have a greater capacity to absorb loss better than jobless youths. And, of course they also have powerful lawyers and hardworking accountants as well as the resources to take on a powerful and well connected financial institution which probably has the Inspector- General of Police as a customer.

The case of Miss Agim is a metaphor, a tiny drop in an ocean of impunity and illegality. Available statistics confirm how pervasive and serious the problem is. According to a 2021 report, various Nigerian banks were fined N2.7 billion by CBN for various infractions after investigations confirmed the validity of customer complaints against them. Five of the banks also failed the apex bank’s Corporate Governance test within the period. In addition, it was found that one fifth of the banks did not comply with the CBN’s Code of Corporate Governance for Banks and the Guidelines for Whistle-blowing.

Interestingly, the volume of consumer loans given to customers also went down during the period. Which is not surprising given the challenges faced by banks in an economy in which most indices are heading south. Banks are understandably unenthusiastic about lending with the Money Policy Rates high. Slashing lending in a challenging fiscal and monetary environment in response makes sense. Squeezing customers who are being impoverished by the same environment as part of an unofficial survival strategy, like the banks seem to be doing, is indefensible.

Illegal transactions and customer complaints, it seems, are only the icing. The real cake is the escalating number of transaction charges and other legal charges through which banks are also making a killing at the expense of customers. As being widely reported, 11 banks reaped N715 billion from electronic transactions and other charges just in the first nine months of 2022, a 16.92% increase over the same period of the previous year. The eleven banks are: Zenith Bank, Sterling Bank and Subsidiary, Stanbic IBTC Holdings, Wema Bank, Fidelity Bank, and Union Bank of Nigeria, United Bank for Africa, Unity Bank, First Bank of Nigeria Holdings, Guaranty Trust Holding Company and Subsidiary Companies, and Access Holdings.

The dizzying number of fees and commissions through which they earned this fortune included: credit related fees and commissions; account maintenance charges; corporate finance fees; e-business income; asset management fees; and commission on foreign exchange deals etc. There are many others; some statutory, others of uncertain vintage.

The CBN is constantly criticized for not taking action against exploitative banks or for not imposing strong enough sanctions. But to be fair, it has introduced a raft of policies, sanctions and other interventions in response to growing public anger about the increasing number of legal, dodgy and outright ways through which Nigerians are robbed by banks. But it needs to do more.

Fact is, for many Nigerians, especially those in the lower demographics, banking transactions are becoming, decidedly unattractive. Finding money is difficult, keeping it in banks has become a process of ceaseless depletion and consistent risk. How can financial inclusion and cashless banking thrive in such conditions? It is true that contempt for banking customers is not a new phenomenon in Nigeria. It is a reflection of the pivot that started decades ago – from customer focused development banking to forex deals, juicy government transactions and “marketing” in micro minis. But from all accounts, it’s getting worse. And something needs to be done before Pillowcase Plc becomes Nigeria’s largest bank.

*Nwabuikwu is a member of THISDAY Editorial Board.