Workers Threaten to Shut Down Mainstreet Bank

Mainstreets Bank CEO, Faith Tuedor-Matthews

The rationalisation exercise embarked upon by the management of Mainstreet Bank Limited may snowball into a pitched industrial crisis capable of disrupting the operations of the bank next week following a seven day ultimatum given to its management to rescind its decision and return to the negotiating table by the bank workers unions.

But in a bid to forestall the industrial crisis, the management of the Mainstreet Bank has moved quickly to douse tension and has called for negotiations with aggrieved staff to explain the need for the restructuring exercise in order to turnaround the bank.

Speaking on the development, the bank’s CEO, Faith Tuedor-Matthews, informed THISDAY that only 84 staff were affected by the exercise, of which 51 voluntarily resigned, while 33 who had attained the age of 55 were let go.

She admitted that the rationalisation was ongoing as the bank continues with the appraisal of its personnel comprising some 2,700 core staff and 2,700 non-core staff, but that 80 per cent of the 33 staff who were let go last Wednesday were ancillary staff such as drivers, cooks and gardeners.

Mainstreet Bank emerged from the carcass of Afribank Plc in August last year after the latter had failed to meet the recapitalisation requirement stipulated by the Central Bank of Nigeria. Afribank was consequently bridged by the Nigeria Deposit Insurance Corporation and acquired by the Asset Management Company of Nigeria.

But in a meeting that lasted till late hours on Wednesday between the bank’s management and national officers of the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) and National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), the bank was asked to recall some of its staff who were let go last Wednesday.

The management of the bank was also asked to consider the proposals submitted to the management by the local chapter of the bank’s workers’ union on the entitlements for any staff that elects to resign his appointments and those who may be let go under the ongoing rationalisation exercise of the bank.

THISDAY gathered that trouble started when the bank, through a letter dated April 24, announced the commencement of its human capital reorganisation exercise in which some staff were encouraged to voluntarily resign from the bank.

Apart from those who eventually opted to resign, it was gathered that the bank, last Wednesday, terminated the appointment of a number of staff without adequate compensation for their years of service in the bank.

According to the letter signed by the bank’s chief executive, the board of the bank, at its meeting held on March 20, resolved that it would be in the interest of the bank, its employees, shareholders and other stakeholders to embark on a human capital reorganisation exercise.

She explained the need to embark on the exercise was to ensure the continued existence of the bank and to better position it to remain competitive in the industry.

She listed members of staff who were eligible to participate in the exercise to include, “members of staff who have spent a minimum of 25 years in the banking industry in any capacity whatsoever; members of staff who have attained the age of 55 years and above; and members of staff who are 50 years and above but who rank below the position of manager.”

The affected staff were to be paid what the bank management described as ex-gratia payment, an amount solely determined by the bank.

Further clarification showed that the entitlement was made up of 24 months basic salary, which the workers’ union has dismissed as grossly inadequate considering the length of service of their members.

A source in the bank told THISDAY at the weekend that the union had sent a proposal to the management on how to compensate the workers without necessarily compromising the finances of the bank, but that the proposal was rejected on the grounds that the bill was too much for the bank to foot.

However, the bank was said to have gone ahead to issue sack letters to some staff last Wednesday morning, a development that was immediately rejected by the national secretariat of the workers unions.

At the emergency meeting held at the instance of ASSBIFI and NUBIFIE late on Wednesday, the bank was given a seven-day ultimatum to rescind its decision or face a protracted industrial crisis.

Present at the meeting were first deputy national president, ASSBIFI, Comrade O. Olasoye, who came with his team, while NUBIFIE was represented by its national President, Comrade B. Okafor, and other officials.

Although Tuedor-Matthews was absent, a source who was at the meeting, disclosed that it had in attendance four executive directors of the bank.

Sources said Mainstreet Bank had decided to weed out some old staff inherited from the legacy Afribank Plc in order to chart a new course for Mainstreet Bank amidst allegations that what the bank was doing was to replace some of the old staff of the bank with new employees mostly from United Bank for Africa Plc.

But the affected workers are contending that if the thinking of the management was that Afribank had ceased to exist, the process of disengaging the staff should have been more transparent.

One of the questions raised was if the bank does not want to have anything to do with the legacy bank, why was the management still deducting various personnel loans assumed from the legacy Afribank?

They disclosed that all the outstanding loans were deducted from the entitlements of those staff who resigned from the bank earlier this year. They also alleged that many of the workers were still being punished for various offences committed while in Afribank.

According to a union member, who did not want to be named, if it was convenient for the CBN to approve generous packages for the former directors of the bank after the initial rescue operation, then it would be unfair to throw out staff who had worked for the bank for over 20 years with little or nothing.

He explained that since some of the staff had taken one loan or the other, by the time their loans are deducted from their paltry entitlements, some of them might still end up being indebted to the bank.

However, the bank’s CEO informed this newspaper that the ongoing restructuring of Mainstreet Bank had the approval of its board and that her management had met several times with workers and the unions to explain the issues and the state of affairs of the bank.

She said when her management team was appointed in August last year, a commitment was made not to lay off staff, but those that stayed on with the bank were placed on a six months probation period and were issued new employment contracts with the new Mainstreet Bank.

“What we met when we came in was not encouraging at all. Of the three banks taken over, Mainstreet Bank was the most challenging because of its age and legacy issues.
“For instance, the bank had been making considerable losses arising from internal fraud to the tune of N1.035 billion in 2011 alone; we had staff who were de-motivated and a large number of aging and pensionable workforce; the ICT infrastructure was very epileptic; poor management practices and processes; high non-performing loans and general ledger imbalances; add to this operating losses of N2 billion a month, so our situation was quite critical.

“As such, we had a lot of work on our plate to stabilise the bank, provide greater market focus, win back the confidence of customers, and we kept the staff abreast of the measures that would have to be taken to return the bank to profitability,” Tuedor-Matthews said.
She added that in spite of the probation period given the staff, the management knew that tough decisions would have to be taken going forward. “All staff of the defunct Afribank were absorbed into the new bank and given the option of remaining or exiting post August 5, 2011.

“While 2,627 elected to stay, 47 declined and left the bank, and those that elected to stay were issued new contracts of employment for Mainstreet Bank and put on a six months probation period, effective August 2011.

“But in order to ensure the continued existence of the bank and to better position it remain competitive, a human capital reorganisation exercise was approved by the board in March this year.

“Members of staff eligible under the reorganisation programme comprised those who have spent a minimum of 20 years in the banking industry in any capacity. We initially made it 25 years, but it was the staff that reduced the benchmark to 20 years.

“Others are members of staff who have attained retirement age, and members of staff who are 50 years and above but rank below the position of manager,” she explained.
Tuedor-Matthews said following the board’s approval for the reorganisation, her management informed staff that they had the option of leaving voluntarily and being paid an ex-gratia payment of 24 months basic salary or staying on under the same terms determined by the new bank.

Eligible staff, she disclosed, had till April 30, 2012, which was extended to May 4, 2012, to elect to leave voluntarily or otherwise when the window would have closed.
Such eligible employees who elected to leave voluntarily were also entitled to a write-off of outstanding indebtedness on car loans and outstanding balances on their official cars, she said.

She added that having worked for six months, other staff under the employ of the bank were now going through confirmation appraisal to identify those to retain and reward with promotions.

Tuedor-Matthews further disclosed that since they informed the staff of the need for the reorganisation, they have held a series of meetings with the Minister of Labour, Chief Emeka Wogu, who had set up a committee to review the issues between the management and unions.

She explained that the problem stemmed from the fact that when the management offered the staff the window of leaving voluntarily and accepting the disengagement benefit of 24 months basic salary offered by the bank, only 51 people took up the offer.

“They did not take advantage of the window we offered them, and now others who might fall short of the confirmation appraisal have missed that window,” she stated.
The bank’s CEO added that the furthermost intention of management was to cause friction and that they shall continue to engage with the staff and unions to see reason.
She said the bank was in difficult position, as it lacked the resources to pay the gratuity of staff but will continue to appeal to them and the unions.

“Picketing or holding the bank to ransom will not help matters,” she said, adding, “this is the third major intervention in the life of the bank from its days as International Bank for West Africa, so this will not help matters.

“We will continue to engage and appeal to staff and hope that they see reason that the survival of Mainstreet Bank must be the paramount objective.

“We still need to upgrade our ICT infrastructure, we need to improve our branches, and we need to restructure with new processes and human capital. All these are contained in our three-year strategic plan which the staff are aware of, so we hope that they shall join us to actualise these goals,” she said.