Hit by the current economic recession in the country, most money deposit banks and insurance firms have slashed their workers’ salaries by between 20 and 50 per cent.
Investigations revealed that Diamond Bank Plc, Heritage Bank Plc, Zenith Bank Plc, First Bank Plc and Wema Bank Plc have reduced their workers’ salaries as of August 31, 2016. This has also been confirmed by management sources and workers in the affected banks.
While Diamond Bank was said to have slashed salaries by 30 per cent, Heritage by 30 per cent, First Bank and Wema Bank workers’ salaries were slashed by 20 per cent each.
It was learnt that the banks tied the decision to cut salaries to workers’ ability to meet deposit targets, which have become unrealistically high in recent time. Hence, workers who failed to meet their targets had their salaries slashed.
Investigations also revealed that some insurance companies have extended the targets of premium generation to their employees.
Before, the marketing departments of the underwriting firms and insurance agents were responsible for generating premium for the companies.
Due to the economic crisis in the country, many insurance firms increased the targets for their marketing departments’ workers with threats of not paying them salaries if they failed to meet it (targets). As such, insurance workers who failed to meet their premium targets, according to industry sources, also had their salaries slashed.
An insurance employee, who spoke to one of our correspondents, said, “Before, it was only the marketers that they used to give targets to. Now, some of us also have targets ranging between N40, 000 and N100, 000 monthly and our promotion and salaries are tied to our performance.”
A Zenith Bank worker, who simply identified herself as Nkem, confirmed the slash in salaries.
Nkem said she resumed work after her annual vacation only to discover that she didn’t get the same salary that she had always received.
Similarly, another Zenith Bank employee, who spoke on condition of anonymity, told one of our correspondents that there was eight per cent cut in their salaries, beginning from August.
The source said the reason given by the bank was that the workers had not been paying the correct tax, hence, the bank had to start the deduction to regularise the tax payable.
On the fear that some workers could be sacked, the source said such fear had always been there, but the current one was beyond description.
He said, “The problem now is that there has not been any promotion since last year, which seems strange.”
An employee of First Bank, who spoke on condition of anonymity, said he had been sleeping and waking up in worry in the past two weeks due to fear of being sacked.
The banker, who just got married in Lagos, said workers had received an email from the bank’s Managing Director about a “new development soon.”
He said, “We have been receiving hints of more lay-offs due to the economic recession in the country, which has deeply affected the banking sector. Some employees lost their jobs two months ago. We also learned that another set of people will be laid off between September and October.”
Ecobank has yet to slash its workers’ salaries, but there is apprehension among the bank’s employees that their pay might be slashed any moment from now.
One of the bank’s senior members of staff, who preferred to be addressed as Handsome Guy, said it had become a tradition among Nigeria’s banks to be imitating one another’s policies, especially those affecting workers’ welfare.
A worker with First Bank Plc, who simply identified himself as Jimson, confirmed to one of our correspondents on Thursday that most bank workers now go to work with the fear that they could be sacked anytime.
“There is perpetual fear in all banks. Every category of workers in the banks is affected by the economic crisis,” he said.
He, however, noted that some bank workers had been resigning and travelling abroad, especially the United States and Canada, to avoid being sacked.
Jimson said, “One of my colleagues just resigned last month because of the fear of losing his job and travelled to the U.S to seek greener pastures. But those who are not interested in leaving Nigeria have devised many means to survive the harsh economy should their letters of sacking come anytime. They are setting up small scale businesses.
“The most common ones are laundry services and restaurants which require capital outlay of N500, 000.
“The academically-sound ones among them have been moving to private universities to take appointments there. The problem is on the high side now. There is perpetual fear among bank workers that they can be fired at anytime.”
The National Union of Banks, Insurance and Financial Institutions’ Employees confirmed the development in the banks.
NUBIFIE Secretary General, Mohammad Sheick, said the issue had become a serious concern to the union.
Sheick said, “There is apprehension in the banking sector. Recently, there was mass sacking by banks and the Federal Government directed that those who were sacked during that period should be recalled.
“We have had about two meetings with the Federal Ministry of Labour on the issue and we are hopefully looking at the possibility of the ministry calling us to another meeting so that we can have an understanding on how to respond to the emerging issues like economic recession and other factors that are affecting the operations of banks.
“Even before the economic recession, the banks have always responded to any policy of the government negatively. The first thing that came to the mind of the banks’ management, which the union has always disagreed with, is to lay off workers.
“They (banks) have to think outside the box and objectively. If they want to cut cost or reduce certain expenditure because of certain government’s policy, then the reality is that they should know where they should direct their attention.
“I can volunteer to say that the thing that eats deep into banks profit and loss is nothing other than the kind of lifestyle of the management staff of the banks. For example, the monthly salary of one executive director is more than the salaries of 100 workers. This is apart from other privileges and perks attached to him as an executive director.”
The Head, Corporate Communications, First Bank, Mr. Babatunde Lasaki, denied that the lender cut its employees’ salaries.
In a response to an emailed question, he said, “This is totally incorrect and unfounded. First Bank staff salaries, allowances and bonuses are being fully paid as and when due.”
The spokesperson of Zenith Bank, Mr. Akin Olaniyan, could not be reached on the telephone. Text message and email questions sent to him were not responded to.
The spokesperson, Diamond Bank, Mike Omeife, denied that the bank had cut the salaries of some of its workers.
The Director-General, Nigerian Insurers Association, Mr. Sunday Thomas, said everybody is a marketer in the insurance firms because they need the premium to operate all the departments.
“It will not be out of order for the companies to give employees targets except the target is unrealistic,” he said.
However, economists said the high deposit targets and the attendant fear by bank and insurance workers could be a strategy by the two industries to survive the current economic reality in the country.
A renowned Economist and Managing Director, Cocosheen Nigeria Limited, Ikeja, Lagos State, Mr. Henry Boyo, agreed that such a measure could be a strategy by banks to remain in business.
He said, “Every sector in the country is affected by the economic crisis, not only the banks. For instance, if a company asks you to pick between being sacked and your salary being reduced, I think most people would prefer the latter option. This could be what is happening.”
Another Lagos-based economist, Dr. Babatunde Abrahams, predicts the mass sacking of workers in banks and insurance firms going by the latest development.
He said, “If anyone has been watching economic trends for a while in the country, you will discover that the sacking of workers is inevitable. Banks trade with customers’ deposits, but I can tell you that very few people have money in banks in this harsh economic period.”
Gold Prices Rise as Soft Dollar Supports Safe-haven Appeal
Gold prices firmed on Monday, propped up by a subdued dollar and slight retreat in the U.S. Treasury yields, with investors gearing up for a week of speeches from U.S. Federal Reserve policymakers for cues on the central bank’s rate hike path.
Spot gold was up 0.5% at $1,759.06 per ounce, as of 0400 GMT, while U.S. gold futures were up 0.4% at $1,759.00.
While the dollar index softened, the benchmark 10-year Treasury yields eased after hitting their highest since early-July. A weaker dollar offered support to gold prices, making bullion cheaper for holders of other currencies.
“Gold is still looking slightly precarious where it is right now, and it’s probably bouncing off key technical level around $1,750,” IG Market analyst Kyle Rodda said.
“Gold remains an yield story and that yield story is very much tied back to the tapering story.”
A slew of Fed officials are due to speak this week including Chairman Jerome Powell, who will testify this week before Congress on the central bank’s policy response to the pandemic.
“There’ll be a lot of questions being put to Fed speakers about what the dot plots implied last week and weather there is higher risk of heightened inflation going forward and that rate hikes could be coming in the first half of 2022,” Rodda added.
A pair of Federal Reserve policymakers said on Friday they felt the U.S. economy is already in good enough shape for the central bank to begin to withdraw support for the economy.
Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.
Investors also kept a close watch on developments in debt-laden property giant China Evergrande saga as the firm missed a payment on offshore bonds last week, with further payment due this week.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.1% to 993.52 tonnes on Friday from 992.65 tonnes in the prior session.
Silver rose 0.9% to $22.61 per ounce.
Platinum climbed 1.3% to $994.91, while palladium gained 0.7% to $1,985.32.
Brent Crude Oil Near $80 Per Barrel Amid Supply Constraints
Oil prices rose for a fifth straight day on Monday with Brent heading for $80 amid supply concerns as parts of the world sees demand pick up with the easing of pandemic conditions.
Brent crude was up $1.14 or 1.5% at $79.23 a barrel by 0208 GMT, having risen a third consecutive week through Friday. U.S. Oil added $1.11 or 1.5% to $75.09, its highest since July, after rising for a fifth straight week last week.
“Supply tightness continues to draw on inventories across all regions,” ANZ Research said in a note.
Rising gas prices as also helping drive oil higher as the liquid becomes relatively cheaper for power generation, ANZ analysts said in the note.
Caught short by the demand rebound, members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have had difficulty raising output as under-investment or maintenance delays persist from the pandemic.
China’s first public sale of state oil reserves has barely acted to cap gains as PetroChina and Hengli Petrochemical bought four cargoes totalling about 4.43 million barrels.
India’s oil imports hit a three-month peak in August, rebounding from nearly one-year lows reached in July, as refiners in the second-biggest importer of crude stocked up in anticipation of higher demand.
Oil Holds Near Highest Since 2018 With Global Markets Tightening
Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.
Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.
China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.
Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.
“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.
Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.
At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.
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