Considering that banks will face extremely challenging times after the raging Coronavirus pandemic, the managing director of Maxifund Securities Limited, Okechukwu Unegbu, has outlined what he called tough measures the lenders must adopt to remain in business thereafter.
Unegbu also advised the banks to begin to adjust in their “elitist” sentiments so as to be people-oriented and begin to play their role meaningfully as financial intermediaries by extending credit to borrowers who are in genuine need of it.
The former Bank CEO and one-time president of the Chartered Institute of Bankers of Nigeria (CIBN) expressed these views on a webinar forum, with the theme: “COVID-19 and the Future of Banking”, organized in Lagos by the Finance Correspondents Association of Nigeria (FICAN).
Unegbu observed that the Coronavirus pandemic had distorted economic activities globally and also thrown businesses into severe crisis as a result of which bank loan beneficiaries might have challenges meeting their scheduled repayment obligations.
He said this might necessitate banks taking the option of litigation in recovering bad or long outstanding facilities.
He suggested that banks should offer their debtors moratorium on the principal and at least 50 per cent reduction on the interest rates, advising that financial institutions should seek mediation with their customers rather than litigation.
“All parties, including the banks and their customers, have been adversely affected by the COVID-19 pandemic, there is no exception; but I expect banks to sit down with their clients and find out ways to enable them to launch back and then settle their indebtedness,” he said.
According to Unegbu, the banks should not adopt extreme actions in “cost control measures” such as embarking on massive layoff of workers bearing in mind that human capital is the most valuable asset of every organisation.
He suggested that more attention be paid to information and communication technology which would benefit both the banks and the employees by having them retrained to continue to serve the financial institutions while earning a living.
He therefore advised that banks should deploy adequate resources towards widening financial inclusion, achieving improved lending and creation of credits.
“The future of banking in the post-COVID-19 era would include digital operation and strong partnership with Fintech companies, enhanced cyber security, widening of financial inclusion, improved lending and creation of credits, mortgage financing and staff training,” Onegbu said.
Unegbu urged banks to revisit the lingering challenge of heavy dormant accounts by finding a means of using the balances for the benefit of the economy instead of giving room for the balances to be tampered with by unscrupulous members of staff.
He wants the banks to liaise with the authorities in resolving this.
The former bank CEO also warned that the Naira might be further devalued in view of dwindling oil revenue and biting scarcity of foreign exchange that confronts Nigeria.
“Of course, the Naira will be further devalued, there is no doubt about that because COVID-19 has dealt a huge blow to the world economy leading to sharp drop in the demand for oil,” he said.
He added that the banks were likely to witness sharp increase in non-performing loans.
“Non-performing loans will increase and the banks must find a way to go about it.
It is something that is most likely to happen because huge trust-deficit awaits the banks at the end of the COVID-19 pandemic”, Unegbu said.
He also mentioned the Anchor Borrowers Fund, Financial Inclusion Strategy and various CBN intervention funds as schemes most likely to be adversely impacted by the COVID-19 pandemic.