(L-R) Mr Ikechi, chairman, Remlords Tours and Car Hire Services; Mr Nkereuwem Onung and Mr Paul Kavanagh of African Sun, Obudu Cattle Ranch, at the just concluded World Travel Market held at Excel Exhibition Centre, London.

MORE Nigerians will be thrown into the labour market as banks prepare to discard their subsidiaries usually known as ‘sister companies’, as they begin this week to strategise on the new banking guidelines recently released by the CBN. The various subsidiaries of banks are likely to be the first victims of the new banking guidelines which seek new operational models for banks with effect from November 15, 2010  in place of universal banking.
BusinessWorld Intelligence can now reveal that a good number of the banks are already making concrete plans to finally offload their various subsidiaries in line with the new directives from the apex bank which has given banks up to the next 90 days to intimate it of their compliance plan. Failure to comply attracts full sanctions.
There are strong indications that most of the banks will not want to put their money into any new partnership to run any subsidiary as there appears to have been very little revenue to be earned from them when they become stand-alone firms. Current financial reports of banks show that the contributions from the subsidiaries to the overall revenue of a banking group appears so insignificant to the extent that such subsidiaries would not continue to be in business if they are not run or owned by banks.
Further investigations reveal that many banks will not want to continue to do business with their insurance arms as they can get better service from the many existing companies even for less costs based on the condition in the industry which has encouraged severe rate cuts. Insiders in the industry also believe that based on the huge loans hanging on the neck of some capital market outfits owned by banks, the question of divestment may become difficult as most of such companies have several billions of margin loans and other facilities still unpaid. The same also applies to the mortgage institutions where banks have sunk in money for the development of real estates across the country. Banks were known to have invested heavily in property developers, using their mortgage bank subsidiaries as the channel. 
Bank insiders believe that banks are still making their money from their core banking business and would not have to keep the subsidiaries for long to avoid the continued erosion of their funds from excessive costs. There are strong indications that most of the subsidiaries, especially those that are not quoted on the stock exchange will collapse. Only a few such subsidiaries exist in the industry today. For the big banks, the subsidiaries are gradually becoming a burden as they battle to fund the bank’s wage and other bills as well as catering for the needs of the very less productive subsidiaries. There are  indications that over 10,000  jobs would be lost in this development. As the case has been since 2005, almost every bank has an insurance company, an issuing house, a mortgage firm, a stockbroking firm, while some even went to the extent of establishing  microfinance banks and building of schools.