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Sunday, July 10, 2011

Nigeria bank directors are the highest paid in Africa

Latest Africa News - Our bank directors are the highest paid in Africa

Following concerns over the extravagant and reckless lifestyles of some bank chiefs, there were recent reports in the media suggesting that industry regulator, the Central Bank of Nigeria
(CBN), was working on modalities that would put a cap on what bank executives in the country could earn. The CBN had since issued a statement denying such a plan.

Standard Bank Group of South Africa, which was voted the best bank in Africa in 2010 by the London-based The Banker, the respected banking and finance magazine, has market capitalisation worth N3.74 trillion (R 170 billion). It is also by far the largest in the continent bank in terms of asset. It has a total asset worth almost N30 trillion (R 1341 billion). Its total earning for 2010 was put at N248.6 billion (R11.3 billion).

But despite being the biggest and most profitable, its directors do not earn as much as those of Nigerian banks. According to the Group’s 2010 report, the total remuneration of Standard Bank’s directors, including pension contributions of its executive directors was N840, 862,000 (R38, 221,000).

This amount, huge as it may appear, is pittance compared with the remuneration of directors of First Bank (which is the second biggest bank in Nigeria and rated 13th in the continent), during the same period.

According to the bank’s 2010 annual report, First Bank’s market capitalisation is worth N448.04 billion. Its profit after tax was N33.4 billion.

In the same period, an approximate sum of N3.7 billion was spent as directors’ remuneration - N2.82 billion higher than what the directors at Standard Bank earned.

A comparison of the remuneration of the directors of the South African Nedbank Group, ranked the fourth largest bank in Africa with the 27th rated bank in the continent - Guaranty Trust Bank - threw up a similar pattern.

Nedbank Group, with a total asset of N13.4 trillion (R608.7billion), raked in a total income of N111.3 billion (R5.1 billion) in 2010. The total remuneration of Nedbank Group’s directors was put at N620, 642,000.00 (R28, 211,000), an amount that is a far cry from what the directors at Guaranty Trust Bank (GTB) pocketed within the same period. Yet GTB’s financial position is nowhere close to Nedbank’s.

GTB’s total asset for the period was valued at N1.168 trillion while its comprehensive income was valued at N40.26 billion. According to GTB’s annual report, its directors were paid a total of N850.53 million, which is almost N230 million higher than the perks directors at Nedbank got.

“This is not peculiar to the banking sector”, said John Salako, president of the Association of Senior Staff of Bank, Insurance and Financial Institutions (ASSBIFI).

“Even our politicians, they just share our money and are cool about it. So if they do it at that level, why are you so concerned about the captains of industry?” Mr Salako said.

Though Mr Salako believes that the issue of remuneration is strictly private to the banks and that the CBN cannot dabble into how much banks pay its executives, the bank directors on their own should exercise discretion and exhibit decency in deciding their remuneration so as not to lose the confidence of their customers and investors.

He is also of the view that the issue of remuneration is one that is personal to every company and that attractive pay packages are paid to executives to discourage them from indulging in sharp practices.

“Banks pay attractive salaries to those who are working in order to wade off temptation of dipping hands into the coffers of the institution”, said Okey Nwosu, president of Independent Shareholders Association of Nigeria.

“When you talk about remuneration, it encompasses so many things,” Mr Nwosu said. “In some cases, there will be bonuses, there will be housing and many other things. It is a function of the board. If the board chooses to offer an attractive remuneration package to make such persons perform, that is its business. I believe that the total remuneration should be comparable to the output of such persons.”

He also advised that comparing what obtains in one country to another might be misleading, as “every environment differs”.


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