Economic Recession: Banks Set to Sack Many Workers and Close Branches
Economic Recession: There is palpable fear in the banking sector as banks might be forced to massively sack its workers if the recession continues.
According to investigation by Punch, a number of Deposit Money Banks in the country will close many of what they described as unprofitable branches as the economic recession continues to bite harder.
It has been forecasted that by December, most of the banks would lay off hundreds of its workers. The latest information is coming barely 24 hours after Unity Bank Plc laid off about 300 workers, more than the 220 that was mentioned last week, according to Punch.
Earlier this year, Diamond Bank Plc, Ecobank and Skye Bank Plc sacked over 3,000 members of their workforce. This all happened just as the recession kicked off. Many are wondering what will be the fate of banks workers who are still in some of these banks as the recession enters a very difficult period.
Following the harsh economic condition of the country, many banks will be forced to close up because some of their branches are not making the profit as of before.
It was also revealed that most of the financial institutions were spending more on salaries and overheads than the income from the branches.
Confirming the situation, an executive director in one of the banks that recently asked some of its workers to go said told Punch, “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.”
Some banks like Ecobank Transnational Incorporated, Guaranty Trust Bank Plc, Unity Bank Plc and Diamond Bank Plc might have to lay off many of its workers considering the decline they have recorded in terms of profit after tax. According to information gathered, the four banks recorded a combined decline of N17bn in their profits before tax for the three months ended March 31, 2016, when compared with the corresponding period of 2015, according to the results of the financial institutions posted on the website of the Nigerian Stock Exchange.
When compared with the PBT of N30.52bn, N32.65bn, N4.26bn and N7.94bn recorded by the banks in the first quarter of 2015, the combined PBT of the four banks dropped by N17bn from N75.4bn in the first quarter of last year to N58.4bn in the same period of this year.
While Ecobank’s PBT fell from N30.52bn in the first quarter of 2015 to N20.63bn in a similar period of this year, GTBank’s dropped from N32.65bn to N30.68bn. That of Unity Bank dropped from N4.26bn to N1.05bn, while Diamond Bank’s came down from N7.94bn to N6.04bn.
In terms of their profit after tax, the four banks recorded a decline of N14bn. It is now clear from all indication that banks might record a massive sack of its employers if the economic situation continues to decline.
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