Government ministries, corporate organisations and high-net worth individuals are being targeted in a fresh round of “high-level de-marketing” campaign in the banking sector aimed at gaining greater market share of deposits. This is part of the intensified competition in the banking sector, which is giving the monetary authorities a lot of concern.
Some bankers have claimed that the de-marketing strategy, in which rumours are spread about the supposedly precarious state of some banks, is being orchestrated by some first-generation banks to get customers of others to move their accounts and businesses to them.
The banks are said to be deliberately nurturing the perception of being the only “safe” banks to the detriment of rivals.
About a dozen banks have been mentioned in recent weeks as having some form of distress due to the effects of the global meltdown sent to heavyweight depositors and top ministry officials in text messages and unsolicited e-mails.
But the Central Bank of Nigeria and the Federal Ministry of Finance have insisted that all banks are generally safe and that government will prevent any bank failure.
Some industry sources say that the second generation and mid-tier banks are the main victims of this campaign and a few have seen limited run in the past few weeks with staff of some companies and government organisations moving their salary accounts from these banks.
Some bankers had previously accused stockbrokers that were heavily indebted due to losses from margin trading of spreading the false rumours to generate tension in the banking industry.
The stockbroker have since rejected this claim.
The Central Bank of Nigeria is worried that the spreading of such rumours could further undermine the banking sector confidence, and has reeled out sanctions for such unprofessional conduct including hefty fines.
The apex bank’s concerns are hinged on the uncertainties over the banks exposure to the stock market and petroleum products importers who have suffered losses due to the recent depreciation in the value of the naira.
The level of distrust in the system was responsible for the surge in inter-bank lending rates in recent weeks, to which the CBN has responded by expanding its discount window to provide liquidity for banks that might be short of cash.
Insiders said on Monday that at least 18 banks have so far accessed the CBN’s expanded discount window to meet short-term obligations.
A top banker, who did not want to be named said the conduct of rivals amounted to “risky” behaviour.
He said, “We know that the banks are tied together in one way or the other, if one falls, others will follow, so it is in our best interest to keep banks afloat. Even if one only bank fails, there will be a run on healthy banks because customers will say ‘if it can happen to that bank why can’t it happen to mine.’”
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