Banks begin setting lending targets for staff

In the wake of an increasingly tough business environment, especially the declining yields on government securities, Deposit Money Banks (DMBs) have started setting lending targets for their employees, as part of efforts to grow their risk assets, investigations by New Telegraph have revealed. Findings by our correspondents indicate that Tier 2 banks, which, compared with their Tier 1 counterparts, have been more adversely impacted by the harsh business environment, are at the forefront of this new aggressive campaign by banks to boost lending.

The situation has, however, put further pressure on bank workers who were already grappling with the challenge of meeting what are generally considered as impossible deposit targets. One of the lenders recently gave each of its branches in the country between May and June to book N60 million loans. But when it became obvious that most of the branches could not comply with the order, the bank reduced the figure to N35 million. According to the source, even this amount is a challenge for many of the branches, as their marketers are not getting enough customers willing to take loans.

The source disclosed that the pressure being mounted on staff to book the loans was forcing a lot of them to engage in unscrupulous practices to avoid being sanctioned, while some workers who could no longer cope with the pressure have had to resign from the bank.

The source said: “Things seem to be getting worse in the industry; things were already tough enough with the high deposit targets and they have now added lending targets.

A lot of workers are resigning or planning to resign, as they can no longer cope with the pressure. “However, what some of them are doing is to arrange with some customers to agree to borrow from the bank even though they (staff) know that these customers don’t have the capacity to service the loan. This has resulted in some customers running away with the bank’s money.

For instance, a lady who was given a loan of N10 million recently relocated to Canada without repaying the money. But the funny thing is that the bank seems not to be ready for the hassles of going after such customers.” Interestingly, the development comes on the heels of reports that some banks have increased deposit targets for their staff.

A financial consultant, Mr. Charles Onyedika, who confirmed this, said that the number of accounts that marketers at some banks must open every month has been increased from 500 to 1,000, a situation, he noted, which has put such marketers in a serious dilemma of how to meet this target in these tough times. “How do you get more people to open bank accounts at a time when more Nigerians are losing their jobs and even those that have jobs are being owed salaries?” the financial consultant argued.

He pointed out that Tier 2 banks were introducing new measures to boost lending because they urgently need to increase their income through growing their risk assets.

He said: “One of the major sources of income for banks is from the interest they charge on loans. However, because they have been grappling with the significant rise in Non- Performing Loans (NPLs), banks have not been lending in recent years. But with the economy now out of recession, many banks are deciding to take the risk to start lending. They believe that the Bank Verification Number (BVN) initiative will help to curb defaults by customers.”

source:New Telegraph