In Case You Missed It, FCMB Could Cut 600 Jobs

FCMB

Some news media outlets reported it that FCMB will be changing its business model. While others said the bank will restructure.

But the outlook for the bank is gloomy. What Ladi Balogun, CEO FCMB, actually meant was that the bank will be downsizing and closing about 23 branches nationwide.

According to Ladi “We are not going to drive our corporate banking aggressively this year we are holding back to improve the quality of our book,”.  he said. To know how bad things went, the bank’s pre-tax profit of NGN7.77 billion ($39.08 million) was NGN23.94 billion in 2014.

So how many jobs are we looking at here? On average, a typical branch hosts about 30 staffers. So in total about 600 Nigerians might  be rendered jobless in next couple of weeks.

The bank cited impairments it recorded in its leverage positions. Its focus going forward will be to recoup all the non-performing loans on its balance sheets. What is not clear is the sector of the Nigerian economy where the loans are stucked-in.

For over a month, banks have been issuing profit warnings before releasing their 2015 full year result. They have been exposed to huge defaults in leverage positions to the oil and gas industry. The global rally in crude oil price has decimated oil borrower’s whose credit positions are currently in red, battering  balance sheets of their lenders. FCMB and other banks in Nigeria are also victims of the government’s change in its mode of banking

Banks have not recovered from the huge blow dealt to them by the treasury single accounts, TSA, policy of the Federal government. While few banks used the such huge funds to create new assets and provide liquidity into the capital markets, many were accused of merely trading with the funds via treasury bills.

As banks are currently silent on their new strategy in the wake of a ‘new banking orders’, the uncertainty in the Nigerian financial services sector is further excercebated by the stalemate in passing the 2016 Appropriation Bill. It is certain that banks realy need to change their business model to endure uncertain economic cycle such as this.