Economic crisis: We won’t bail out banks with public funds – FG...................................

The Federal Government has ruled out any possibility of providing bailout funds to banks to boost their operations, following the gale of job losses in the banking sector in the last two weeks.

A top government official told one of our correspondents on Saturday that it would be wrong for the government to bail out the banks with pubic funds because all the other sectors of the economy were faced with one challenge or the other.

The official, who spoke on condition of anonymity as he was not permitted to comment officially on the matter, said if the government announced any bailout for the banking sector, all other sectors of the economy would start requesting for their own package.

According to him, the government does not have enough funds to finance its operations, therefore, bailing out any sector will further compound the current economic situation in the country.

The source said, “We all know that this government is seriously looking for money to finance its operations.

“So, can a government that is looking for money and that is also struggling to pay its workers’ salaries be able to provide a bailout for any sector? Where will such money come from? I can tell you that such is not currently feasible.”

The Special Adviser on Media to the Minister of Finance, Mr. Festus Akanbi, also said the option of a bailout for the banks was currently not on the agenda of the government.

“As we speak now, there is no plan to provide bailout funds for the banks. We are not considering such an option currently,” Akanbi simply said and declined further comments.

No fewer than 1,400 workers have been sacked in the last two weeks by banks in response to the challenges in the nation’s economy, which have led to most of the financial institutions to record declining profits.

The PUNCH had reported that Ecobank Nigeria sacked over 1,040 of its employees, while Diamond Bank and Skye Bank also retrenched 200 and 175 members of their workforce, respectively.

FBN Holdings, the parent company of First Bank of Nigeria, had earlier said it would prune the number of its employees by 1,000.

Following the gale of job losses, the Federal Government, through the Minister of Labour and Productivity, Dr. Chris Ngige, had directed the banks to stop the retrenchment exercise.

The minister further directed that all the retrenchments done in the past four months should be put on hold pending the outcome of a proposed stakeholders’ summit for employers and employees of the banking, insurance and financial institutions scheduled for the first week of July.

Ngige’s directive to the banks had fuelled speculations that the government might be thinking of a package to cushion the impact of the withdrawal of funds through the Treasury Single Account from the banking sector.

The Minister of Budget and National Planning, Senator Udo Udoma, had while speaking shortly after the Federal Executive Council meeting on Wednesday, said the recent appeal by the government to the banks not to sack workers was based on the conviction that by the time the economy picked up, the banks would need the workers again.

He said the government was convinced that the economy would pick up soon and the banks would need the workers again.

Udoma said, “With regards to the plea to the private sector (not to sack workers), it is because we know that by the time the economy picks up, they will need those people again.

“We know the economy is going to pick up and we are confident about that. That is because of our plan; the plan was conceived because we knew that this was the trajectory we will move into.” 


[The PUNCH]