According to insider sources at commercial banks who spoke with our correspondent on Sunday, this strategy is employed by banks that are classified as private limited companies to raise money internally by laying off employees across all staff levels, including IT staff.

They explained that this was because the banks had created goals for their employees to fulfill while looking for initial public offerings and private placements, as they had not been able to successfully access the capital markets to acquire sufficient funds.

Eleven banks are listed as private limited corporations, according to investment management firm Afrivest.

According to a member of the bank staff, the process is a component of the transparency plan that the CBN received, which details how the recapitalization objectives will be met.

The official, who spoke under anonymity out of concern for retaliation, revealed that Sterling Bank had been contacting clients to revive inactive accounts, while Union Bank had set a national target for its employees to raise N50 billion through new account openings and other means.

According to the source, many employees have welcomed the possibility to making additional cash because of the promised incentives, even if the targets have remained challenging and unachievable owing to the present economic climate.

Lower-level employees, on the other hand, have chosen to remain out of the program since they do not have any connections to wealthy people.
The apex bank gave us a deadline to submit a plan outlining how it would be accomplished for the recapitalization exercise that the CBN ordered the banks to undertake, and we all did, according to the source. Therefore, some banks intend to combine internal fund generation with share sales.

“Those who own stock publicly are entitled to shares. Establishing financial goals for their employees is one method private limited firms that are classified as banks but are unable to offer shares have found to raise money.

In order to meet this goal, staff members will be asked to ensure that clients open new bank accounts, revive inactive ones, and make and maintain sizable deposits in their accounts.
“Union Bank has asked its staff to bring in new funds worth N50 billion in the form of deposits into the accounts,” the official went on. Non-sales and marketing employees, including IT specialists, business and back office professionals, and those whose main duty is not to generate revenue, are also involved in the N50bn idea.

“Those who are not directly involved have been called in, but the regular marketers are still going about their business. Although it has no effect on our KPI, it has given us more obligation to ensure that the banks fulfill their goals. Due of financial incentives, people are contributing money gradually thus far, and it is growing slowly.

Results also indicated that, as the race for capital heats up, bank employees are being forced to use new channels to connect with prospective clients, especially social media.

Ade, a customer of Sterling Bank, stated that his bank had called multiple times to reactivate his dormant account. “They’ve been calling to reactivate my dormant account,” he stated. They have made roughly three phone calls. A survey regarding client satisfaction was also sent. Thus, it seems that as part of the recap operation, their employees are under pressure to win back previous clients.

In a similar vein, certain banks have hired social media stars to market their deals on sites like X and TikTok.
The banks are permitted to use different methods to raise money as long as they stay within the bank’s norms, according to an apex bank official who is not permitted to speak to the media.

“Well, banks can use those methods to raise the funding since they have already presented their proposals. But they are unable to deviate from the established guidelines.

Olusoji Oluwole, the president of the Association of Senior Staff of Banks, Insurance, and Financial Institutions, commented on the development and stated that employees are expected to guarantee sustainability and that all staff members collaborate to fulfill regulatory criteria.
It goes without saying that everyone in a profit-making firm will have goals. Therefore, you need to open a certain number of accounts in order for your firm to survive. Shares will be sold by banks, and everyone will have sales goals. It’s not at all unusual.

This has to do with maintaining our institution as a whole. It is true that everyone will have goals. Thus, it’s nothing novel. This won’t be the first time it occurs. Rights concerns have already been voiced by a few entities. Marketing that would therefore not provide any issues. Publicly traded institutions assign its employees targets to market to their friends, family, and everyone else. According to him, stockbrokers also set goals for themselves in order to generate revenue.

He did, however, caution the banks against establishing arbitrary goals, pointing out that each employee’s capacity should be taken into account prior to setting goals.

The Central Bank of Nigeria ordered Deposit Money Banks to recapitalize by the end of March. The CBN recapitalization circular states that national banks and commercial banks with international authorization should raise their capital bases to N200 billion and N500 billion, respectively, and that regionally authorized institutions should reach a capital floor of N50 billion.

In the same way, non-interest banks that hold regional and national authorizations must raise their capital to N10 billion and N20 billion, respectively.

This round of recapitalization will solely record the share capital and share premium items on the Shareholder Fund component of the balance sheet, per the CBN circular.

According to the apex bank circular, banks have 24 months to raise the necessary capital through license changes, mergers and acquisitions, or further capital raising. The 24-month period starts on April 1, 2024, and ends on March 31, 2026.
The process of raising a bank’s capital to comply with regulations, strengthen its financial stability, and expand its lending capabilities is known as bank recapitalization.