The Banker suicide – the CBN’s next frontier

By Joseph Edgar… The news is everywhere, the Banker has committed suicide. He was said to have pulled the trigger on his own head and in front of his parish priest. Where or how he got the gun is story for another day, but today I want to look at the issue of pressure Banks pile on their members of staff, especially when it comes to loan default.

The story is that he was involved in giving out a N350m loan which has gone bad. Pressure from his employers to recover the loan, it is alleged, led to him taking his life. I am not sure this is the real story since I have encountered many versions, but this in itself has led me to look closely at this practice amongst banks.

It is a cold place to be when your loan goes bad. The Banks deny you and start treating you like a leper. You are immediately thrown into the grinder and asked to go recover. In some extreme cases, your salary is stopped and you are out on working suspension until you recover. The madness in all of this is the fact that you are being given the same pressure to give out the Loan, so for most bankers it is a no win situation. If you do not give the Loans you are in trouble and if you give the Loan and it goes bad, you are toast.

But let us look critically at the loan disbursement procedure. For those of us who have borrowed from the Banks, you will immediately observe that it is a long winding road of procedural nightmare laced with red tape and approval points that go in some cases and depending on the amount as far as the Board of the Bank. At this point, the account officer, someone like this sad lad who just took his life, becomes a mere ant and is helpless in either speeding up the process of getting a reprieve in the face of a negative feedback. The internal control people and Risk Management assume a lot of power at this point. They prance around doing their checks and ticking their puny checklists and in some cases even visit the clients to ensure that all information tallies. Finally approval is given. The Managing Director to the Executive Directors and all members of the Credit committee sign off and the money is disbursed. The moment the client pays back everybody is happy and a lot of back slapping will be done, but when there is a default the original account officer remains a lone figure, stark naked.

He is isolated, humiliated and pilloried with pressure. He becomes an Ebola victim and is immediately thrown up by the same Risk Management and Internal control goons who okayed the loans in the first place. Th fact that their risk management model has failed is lost on them as the staffer is made to join recovery until the loan is brought back.

I have seen this happen so many times in my long career in the financial sector and I begin to ask myself why the certain cowardice. The hounding is unimaginable, the humiliation reduces the account officer to a beggarly position. He now starts resuming in the customers office, house and church. The customer who would have been owed, or who is also depending on a counterparty for payment would offer him no respite and in those moments the otherwise brilliant banker will begin to see his once bright career face doom. This throws in stress, fatigue and fear and since people react to these things differently, we begin to hear this kind of story where an otherwise sane young man sees a bullet in the head as the only way forward.

Who do we throw the blame at? Is it the regulators, the management of these banks, its shareholders who demand that dividends be paid irrespective of the horrendous economic climate thereby driving management to these kinds of tactics which in itself would make the mob green with envy. I think all stakeholders should jointly share the blame and in so doing agree to work as a team in seeking a middle of the road solution that would be of benefit to all stakeholders.

The regulators, must work with the Banks in strengthening risk management and controls, the credit bureaus must be further empowered and integrated into the system and the account officer’s role be limited to just the initial introduction and continuous relationship management. He must be given the confidence that the system has the capacity to objectively appraise a loan request, throwing up red lights in a bid to seeking in advance a possible defaulter and nipping it in the bud. The Management must also be involved in the process especially in the process of recovery. They should work in partnership with the account officers and the clients in seeking credible repayment solutions instead of setting up war tribunals cloaked under the guise of a disciplinary committee to try the account officer for daring to bring this kind of account to the Bank. The shareholders themselves must also be carried along in the Banks communications especially where it concerns very huge sums which could impact negatively on the firms bottom line. This way, they could diffuse tensions and investor sell out in the event of a poor result.

Before I close, let me give you a small example of what I am talking about. My close friend who used to work with one of the failed Banks – the pearl of banking, once gave an invoice discounting type facility to his customer. The amount was meant to purchase raw materials for supply at the factory of the largest indigenously owned conglomerate. The funds were disbursed directly to the supplier after all process were covered internally and the payment was domiciled to the Bank. However, the story changed when the conglomerate claiming that they had discovered a fraud in their accounts department suspended payment on all supplies until they could get to the bottom of the fraud. This took close to one year by this time, my friend had gone through the whole hug, queries, facing internal committees, moved to recovery, working suspension with no pay, full suspension with the express instruction not to come to work again until the funds where recovered and finally sack when the time frame they gave him elapsed. The same internal and risk people who accessed the facility, giving it a pass mark and supervised the process of disbursement where the same who hounded him out of the system. The management who approved the loan after being ‘properly’ advised endorsed the sack and the fact that enquiries at the conglomerate confirmed that the credit was booked and that payment would be made in due course did not deter this bohemian attempt at management.

My friend lost his essence, felt like a failure and lost his family who fled to Canada. So you see why I really want to drag the CBN as the apex regulatory body into this matter. They must as a matter of urgency jump into these issue with a view to reforming this. The legal system must also be primed to protect the rights of the individual who is subject to this level of arbitrariness showing them a clear road to seeking not only cover but justice.

If we do not act now and assuming that this particular case is truly as a result of a bad debt, we may just begin to see a trend. This has come to the limelight becuase the victim comes from a renowned family. My friend did not kill himself, but today five years after he is still wandering around aimlessly asking himself what went wrong.

Don’t even know how to close this write up. The conclusion has escaped me, due to the deep stress I am going as I write. For I feel the pain of thousands of bank workers who today are being pushed to the hollowness of a bland future simply because they tried to do their jobs.

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