Just eight years after the Central Bank of Nigeria (CBN) laid it to rest, demarketing in the banking space has refused to die. Its ghost, is on the prowl again, ready to spook the nation’s financial markets.
Demarketing, as defined by Wikipedia, an online dictionary, is ‘unselling’ or ‘marketing in reverse’, which includes general and selective demarketing. The online dictionary, having looked at various definitions of the term, comes to a conclusion that the common thread in all of them is the intent to decrease demand.
That has been the motive of the conspiracy entrepreneurs and professional partisans that promote demarketing in the country, to cause a dip in demand for the products of the target banks via false information, capable of rocking public confidence in the fundamentals of their targeted competitors and make them lose patronage.
Though, it did not start today, recent actions of the apex bank have unwittingly let loose the genie of demarketing again. These include the manner it announced the dissolution of Skye Bank board, and the forex transactions’ embargo slammed on nine banks .
The cusp of the two actions is a flight to safety among customers, which almost caused a run on some banks.
Another fallout is that some unscrupulous bankers, and their partners in the public, decided to exploit the situation to demarket other banks, with a view to poaching their customers. For instance, the Permanent Secretary, Lagos State Ministry of Finance was reported to have begged Lagos State employees not to close their accounts with Skye Bank. That was even before the CBN’s rejoinder and advert in several newspapers, saying that “Skye Bank is not distressed.” As for forex embargo, many analysts faulted the apex bank’s approach on the issue. For instance, Proshare, an online medium, in its September 1 post expressed shock at the sudden action of the CBN when it was aware of the tight dollar liquidity in the banks. It stated: “Back in 2015, when the TSA was first implemented, the CBN, cognisant of the tight US$ liquidity position of the banking sector, had granted a moratorium on the repayment of the same.
“We are therefore surprised by the sudden reversal in policy, especially since the US$ liquidity position of the banks, in our view, has progressively worsened. For one, the sums being mentioned in the media do not even tally with the industry-wide data published by the CBN. According to the former, banks are on the hook for US$2.3billion, while according to the latter, total public sector foreign exchange deposits were just US$1.42billion at the end of July. But more importantly, any institution with a working knowledge of banks operations and balance sheets – as the CBN undoubtedly has – would know that overnight implementation of the TSA was not a realistic possibility. So beyond the immediate liquidity risk to the banks, the news on the lifting of the ban only adds to perceptions that the CBN is not in full control of its regulatory functions.’’
A newspaper columnist even joined Proshare to questioning the integrity of CBN as far as its regulatory functions are concerned. Hear him: “Depositors, including the staff of
Lagos State, however, need a different sort of counsel.
They need to be honestly informed about the real situation of Skye Bank. Hundreds of thousands of depositors of Savannah Bank and Societe Generale Bank of Nigeria (SGBN) are still holding to empty air more than 10 years after those banks were closed without previous warning from the CBN. Oceanic, Intercontinental, BankPHB etc were presented to the public as still strong banks until Sanusi replaced Soludo, who helped to keep up the fiction of soundness. So, why should depositors rely on a CBN which had failed them repeatedly and made them to pay dearly for it? To be quite candid, the last organization to declare a bank distressed is the CBN. Usually by then, the depositors must have been taken to the cleaners and their funds irretrievably lost.”
This show how the demarketing of banks has even eroded public confidence in the regulator, CBN, itself.
Recall that in the past, the apex bank tackled the issue with the threat of severe sanctions. This calmed the industry awhile, only for its ghost to surface again, like The Terminator, threatenng to go down with as many as it can lay its lethal hands upon. This time around, apart from Skye Bank, also prominent among the group of nine banks in the NNPC TSA saga which is being targeted for demarketing is Heritage Bank.
Their grouse, according to industry sources, stemmed from the ability of Heritage Bank to rise, like the Phoenix; that mythical bird, from the ashes of the defunct SGBN and perch comfortably in the comity of Tier 2 banks in the country.
The achievements of the bank within a short period of time are so intimidating. For instance despite the pessimism surrounding its viability and ability to compete in a fiercely competitive industry.
Recall that the bank commenced business with the payment of about N21 billion to depositors of the defunct SGBN. A feat considered unattainable then.
This was followed by its landmark acquisition of the former Enterprise Bank as well as seamless integration of the two banks. Its management was up and doing as it deploys innovative technology to render services in unprecedented style as reflected by its ‘Experience Centers’. Heritage Bank has also succeeded in carving out a niche as an ‘SME Friendly bank’ due to its success in promoting and supporting micro, small and medium (MSMEs) businesses.
According to its 2015 financial statement, the bank recorded gross earnings of N24.2 billion and posted a profit after tax of N1.1 billion. This was made possible via customers’ deposit of N312 billion, while the banks also gave out N175 billion loans during the year.
Also, in March the CBN appointed Heritage Bank as partner for the pilot phase for its N3 billion Youth Entrepreneurship Development Programme.
The above definitely are not indications of distress or a bank about to be taken over by the CBN. Yet there have been barrage of de-marketing assaults against the bank to convey wrong impression about its financials.
The de-marketers of Heritage Bank have sought to undermine it with two-pronged attack: First, they sought to paint the bank black with a tar of political colouration by tying it to the embattled Senate President, Dr. Bukola Saraki. Even at inception in 2013, Saraki’s family has less than 10 per cent stake in the bank. More so now that the ownership is more diluted due to additional capital from new investors.
In addition, some of the de-marketers sought to link Heritage Bank with the former chairman of Skye Bank, Mr. Tunde Ayeni. They claimed that Ayeni is a majority shareholder, that he borrowed so much money from the bank, as a result of which the CBN will soon ‘take over’ the bank as it did Skye Bank.
After re-circulating these falsehoods without success, the de-marketers started concocting stories about the financial health of the bank. “The bank is distressed; the CBN would soon sack the management”, they falsely claim.But all these did not stick.
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