If the forecasts for the banking sector this year by seasoned financial sector analysts and the series of assessments by the Central Bank of Nigeria (CBN), are to be believed, 2017 is likely to open new, albeit positive, vistas for banks in Nigeria. Experts insist however that even when the indicators are promising, the nation’s banks must opt for serious internal operational reengineering in order to harness the accruable opportunities in the evolving Nigerian economy this year. For nearly two years, the federal government’s strict implementation of the Treasury Single Account (TSA) denied the sector one of its most reliable sources of funds – public sector, estimated at between N2 to N3 trillion or 10-15 percent of banking deposits, leaving virtually all the banks in the country desperately exploring and scouring for alternative sources of deposits to meet their obligations to their customers and shareholders.
It is further estimated that the public sector funds withdrawn from commercial banks in the country between 2015 and first quarter of 2016 represent about 20 per cent of deposits of all the banks that is roughly put at about N17.5 trillion (as at the end of the first quarter of 2015) and 13 per cent of the aggregate assets of the industry which stood at N27.4 trillion during the same period. Worse still, the timing of the withdrawal of the public sector funds from the commercial banks coincided with when the economy was reeling from drastic fall in oil prices and attendant foreign exchange crisis.
Beyond exploring alternative sources of deposits, banks in the country have since the first quarter 2016 resorted to series of cost cutting measures including disengaging percentages of their workforce. The difficulty experienced by customers in withdrawing cash from ATMs and across the counters in all the banks in the country without exception, during the yuletide season, was testimony to the widespread nature of the challenge the banks faced for most of last year. The country’s slide into recession in the second quarter of 2016 also made things difficult for the banking sector.
Interestingly however, in spite of the odds the sector had to contend with last year, the relatively young Heritage Bank remained focused and even resisted the temptation of laying off staff even when the much bigger and older banks were retrenching hundreds of their workforce. Records at the CBN indicate that in 2016, over 3,000 bank workers were disengaged by commercial banks in Nigeria. A few banks even took the step of reducing the salaries of their staff. Heritage Bank was not part of that rave of downsizing for most of 2016 even when the bank had valid reasons to do so given the sheer number of workers it inherited from Enterprise Bank when it acquired the financial institution from AMCON in 2014.
For most of last year, the bank was busy redefining and redirecting its energies to areas of priority to mitigate the challenges engendered by the withdrawal of public sector funds from commercial banks by the federal government as well as the dip in the global oil market. “Don’t forget also that just before the withdrawal of the public sector funds and the dip in earnings from oil, Heritage Bank had just acquired another commercial bank, Enterprise Bank. So for most of last year, it was important we properly reengineer our operations and decide the most effective ways to deploy our workforce and of course decide what options for those of them we believe will not fit into the new direction or aspiration of the bank,” confided a management staff of the bank.
In a bold bid to redress current challenges, Heritage Bank has resoundingly diversified into several other areas but significantly, the bank now leads the charge in agriculture financing in the country. In the last one year alone, the bank has demonstrated its commitment to the development of Nigeria’s agricultural sector with its rich portfolio of allocation to the sector. Among several other things, Heritage Bank currently works with players in the rice value chain to effectively tackle identified bottlenecks with the aim of helping the nation achieve its year 2020 production target of 7.7million metric tons of milled rice or 10.8million metric tons of paddy rice at milling recovery ratio of 62 per cent. Interestingly, the Central Bank of Nigeria has found in Heritage Bank a reliable partner in the implementation of various interventions designed to boost the productive sectors of the economy. Speaking recently at the third edition of Rice Investment Summit in Abuja, Olugbenga Awe, Group Head, Agriculture Finance at Heritage Bank said the bank will especially focus on directing its stream of support to rice farmers and agribusinesses in the rice value chain using the platform of CBN’s popular Anchor Borrowers’ Programme, ABP. The Bank is currently supporting hundreds of smallholder farmers in various communities in Kaduna and Zamfara States engaged in the rice value-chain through the ABP
It could also be recalled that in the last quarter of 2016, Heritage Bank granted a N2 billion loan to Triton Aqua Africa Limited, TAAL for setting up of fishery production chain. The facility granted in collaboration with the CBN under the Commercial Agriculture Credit Scheme was expected to, in the short term, help Triton double its current production capacity of 25,000 metric tonnes with projection that the company will scale up its production to 100,000 metric tonnes in five years through a strategy of backward integration of increasing local production to reduce importation of fish.
The partnership between the bank and Triton Farms would help boost local production, conserve scarce foreign exchange and enhance food security, and of course facilitate the creation of hundreds of new jobs, which are the ultimate aims of the present administration’s diversification agenda. The bank had already indicated that it would even deepen such supports for agribusinesses in 2017.
Truly, Heritage Bank has found its niche hence the compelling need for staff realignment and operational fine-tuning. The recent restructuring exercise in the bank led to the promotion of several staff members who were saddled with higher responsibilities in line with the bank’s determination to deepen its core mandate areas. Of course, inevitably, the restructuring led to the disengagement of some members of the workforce from the services of the bank.
The restructuring, the bank said had become inevitable, “being part of the bank’s strategic plan to keep a vibrant workforce that will enable it achieve its vision of being the most innovative bank of choice in service delivery, superior returns to its various stakeholders, and to also contribute to the growth of the nation’s economy.” Even then, Heritage Bank has been roundly commended for giving the disengagement process a “human face.” Indeed the bank boldly asserted that those who were affected by the exercise were adequately compensated. This much was confirmed by the President, Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), Mrs. Oyinkan Olasanoye, who affirmed that the association was, as far back as November 2016, duly notified of Heritage Bank’s intention to carefully disengage some members of staff and that the association had in fact signed an agreement with the management of the bank on how the disengagement exercise should be executed. “The restructuring processes are meant to up-scale this institution’s activities in the strategic sectors of the economy as well as concentrating on deploying our expertise and competences to specific business areas where we enjoy comparative business advantage,” the bank had said.
In essence, Heritage Bank has upped the ante in the crucial area of service delivery in the nation’s banking sector. There is excitement in the air in all the branches of the bank as the reinvigorated workforce is now poised to firmly position the bank as the nation’s leading financier of micro, small and medium enterprises.
- Adebisi-Ojo, a financial sector analyst is based in Abuja.
