First bank of Nigeria Plc has concluded plans to close several branches nationwide this is as a number of Deposit Money Banks in the Country that will close many of its branches in what they described as unprofitable branches investigation by our correspondent has shown.
In a letter of approval exclusively obtained by AljazirahNigeria from the central bank of Nigeria conveying the approval of the apex bank signed by Z. Markus for director of banking supervision dated Nov. 7th, 2019.
According to the document, first bank will shut down banking operations in 23 branches spread across 23 states of the federation.
AljazirahNigeria also gathered that the banks would lay off hundreds of workers between now and December. The revelation came barely a few months after Diamond Bank Plc, Ecobank and Skye Bank Plc had earlier in the year sacked over 3,000 members of their workforce.
It was learnt that following the economic downturn in the country, a number of bank branches could no longer justify their existence as cost analysis had shown that the financial institutions were spending more on salaries and overheads than the income from the branches. Some of the branches for closure are as follows
Katcha Niger State, Iyamoye Kogi State, Oguma Kogi State, Jakusko Yobe State, Okemesi-Ekiti Ekiti State, Damasak Borno State, Garkida Adamawa State, Gulak Adamawa State, Damboa Borno State, Oro Kwara State, Efa Akwa-Ibom State, Tinapa Cross River State, Etinan Akwa Ibom State, Utu Etim Ekpo Akwa Ibom State, Sabongid a-Ora Edo State, Ikirun Osun State, Odi Bayelsa State, Idoani Ondo State, Mopa Kogi State, Aiyetoro-Gbede Kogi State, Share Kwara State, New Langtang Plateau State, Brass Rivers State.
The bank was, However, required to deploy alternative banking arrangement to ameliorate the negative impact the closure would cause to the residents of the areas where the branches are located.
Some top bank executives, who confirmed the development to our correspondent under the condition of anonymity, said some lenders might be forced to relieve more workers of their duties before the end of this year.
An executive director in one of the banks that recently asked some of its workers to go said, “We have laid off some of our staff members but that it still not enough. Many branches are just existing for the sake of being there. They are not generating enough income. What they are bringing in is far less than what the bank is incurring as costs on them.
“We may have to close such branches before the year ends. I know a number of other banks that are planning something similar.”
Commenting on the development, some financial experts who spoke to our correspondent, described branch closure as an ongoing action in the banking sector, especially in times of economic downturn.
They, however, noted that banks were required to notify the Central Bank of Nigeria before closing any branch.
“It is an ongoing administrative thing in the banking industry. Banks will want to rationalise branches, especially in a difficult economy. Banks are planning to cut costs. Branch rationalisation is normal but the CBN has to be notified.
The banking sector has been facing a number of challenges following the downturn in economic activities.
The slowdown in the economy, which has led to a high rate of non-performing loans in the banking system, made four lenders to lose at least N17bn in profits in the first quarter of this year.
Banks in the country had been posting sharp increases in profits before tax and profits after tax since 2011 after the establishment of the Asset Management of Corporation of Nigeria in 2010 following the banking sector crisis in 2009.
However, a consistent drop in the global prices of crude oil, Nigeria’s main foreign exchange earner, since June 2014, caused banks’ profits to start declining.
An economic analyst attributes the declining profit in the financial services sector was a reflection of the challenges facing the Nigerian economy.
As at the time of filling in this report it is still not clear when the closure of the branches will take effect.