(L-R) Mrs. Chinwe Uzoho, head, product research and development, Access Bank; Mr. Ohimai Balogun, winner of the bank's promo and Mrs. Abiola Bashorun, group head, retail sales, Lagos, Access Bank at the presentation of the Peugeot 407 car to the winner in Lagos.

THERE are strong indications that the Central Bank of Nigeria (CBN) may sanction some bank chiefs over high overhead cost. This is coming on the heels of the revelation that one of the bailed-out banks has an annual overhead of over N100 billion.
Financial intelligence reports indicate that the only thing holding the apex bank from taking any punitive action against the bank chiefs is the signal such action may send to the banking industry, especially now the apex bank has been begging investors to commit to its recapitalization efforts in the bailed-out banks. According to a CBN source, the apex bank is worried that some of the CEOs have not been able to reduce the high overhead cost in their banks over one year they were appointed to rescue the banks.
The CBN, as part of the reform in the banking sector had directed banks to cut their cost which it said was too high, and many banks responded by reducing their work force by up to 25 per cent.
Before the on-going reform, the monthly overhead cost of one of the banks that was rescued stood at N4.8 billion, excluding salary and wages, forcing the apex bank to raise alarm on the discovery of such huge overhead.
One of the banks bailed out by the CBN has annual staff salary bill of nearly N60 billion and other bills of N40 billion. This brings its total annual overhead bill to N100 billion . This development is also believed to have been the reason for the spate of retrenchments all the bailed-out banks now have to grapple with. There are indications that CBN is asking for a 30 per cent labour cut across the bailed-out banks.
Investigations reveal that the assignment given to the CEOs, especially those of the troubled banks has become very difficult task as the current overhead cost are still considered high by the apex bank. Many of the bank chiefs are said to be at a loss over how to reduce these without offending some senior and highly connected staff and contractors who are mostly the beneficiaries.
Though some banks have not been able to reduce their costs to the level acceptable to the CBN, the apex bank however has acknowledged that overhead costs in all the 24 banks operating in the country were not as it used to be before the ongoing reform.
As a cost-reducing measure, some of the banks have out sourced some of their jobs to contractors that would perform them at a cheaper rate. Also some contracts have been restructured and the charges reduced to reflect the reality in the sector.
BusinessWorld gathered that some of the CEOs appointed by CBN who are not able to reduce overhead bills of their banks are beginning to loose sleep as the apex bank has not hidden its displeasure over the development.