Months after its Chief Executive Officer, Herbert Wigwe, donated N1 billion to the Coalition Against COVID-19 (Ca-COVID), Access Bank has announced that it can no longer afford the salary of its employees, hence, a need to sack some workers and cut salary, in order to remain operational.
The new development is aimed at cutting cost as the lockdown period - a measure taken to curb the spread of Coronavirus - has affected the operation of Nigeria's largest lender and rendered some workers in Access Bank redundant.
Allnews learnt that Access Bank no longer intend to place some of its workers, considered non-essential, on its payroll, while other essential employees will receive a pay cut as the lender is expected to continue skeletal operations until the end of the fourth quarter of 2020.
The affected non-essential workers
According to Wigwe, Access Bank no longer need many tellers, security personnel and cleaners, as it currently has - which represents 75% of its staff - because some of its offices will remain close till December.
"We probably don't need as many security men as required, even to the fact that we are not gonna have all our branches open between now and December. We don't need all the tea girls. We don't need all the cleaners. We don't need all the tellers etcetera, etcetera," Wigwe said while addressing workers in a video seen by Allnews.
Salary cut to affect Wigwe, others
Speaking further on Access Bank's cost-cutting measure to sustain the COVID-19 period, Wigwe said Access Bank employee would have to make some salary adjustments, starting from him.
He revealed that he would receive 40% pay cut, "I will be the first to take the hit and I'm gonna take the largest pay cut, which would be as much as 40 per cent. The rest we would have to cascade right through the institution. Everybody may have to make some adjustments of some sort." Wigwe said.
He added that the measures were taken to protect the Access Bank franchise and ensure that if any bank is standing post-coronavirus, it should be Access Bank.
Does Access Bank have a financial problem?
The cost-cutting measure came as a surprise as it is expected that a bank providing financial and material donations worth over a billion to the fight against COVID-19 should boast of a healthy balance sheet.
Access Bank had experienced significant growth in its financials last year after merging with Diamond Bank, posting 26.10% increase in gross earnings for full-year 2019, but it also recorded 31% increase in operating expenses as it shied away from laying off workers after consolidation.
Access Bank has the third largest workforce in the banking sector, pegged at 6,898 as at 2019, while the expenses incurred on staff salaries last year was N73.2 billion (third highest). Now, with business conditions not improving in the banking industry, the lender is trying to curb the operating cost by eliminating redundancy.
The Coronavirus pandemic has taken a bite in the finances of Access Bank after forcing the lender into skeletal operations. Also, the crash in crude oil price, which is affecting Nigeria's indigenous crude oil-producing firms, is threatening Access Bank and other lenders' finances.
Nigerian banks are known to finance these domestic oil firms, with about a third of loans by banks awarded to oil firms. So the crash in oil price has triggered a possible rise in bad-debt for Nigerian banks according to Bloomberg, as oil firms struggle to remain lucrative amidst the coronavirus outbreak, lockdown and oil price crash.
Is mass sacking looming in the banking sector?
The plan to downsize and cut salary makes Access Bank the first top tier lender in Nigeria to take this path amidst Coronavirus pandemic. While other industries had been affected, the banking industry in Nigeria had been weathering the storm.
But Access Bank's cost-cutting measure might not be the last in the banking industry as the President of Chartered Institute of Bankers of Nigeria (CIBN), Uche Olowu, had projected last year that 30% of bank jobs would be lost to technology - which is already playing a significant role amidst the pandemic and work-from-home period - in three years, including 2020.