CBN and demarketing in banking industry


By Samuel Ibiyemi

It is no longer news that at this period of global advancement in information technology as driver of competition  in banking industry, bank officials in Nigeria are still battling to do away with the culture of  sponsoring and spreading  false  news about other banks considered as rival so as to take over juicy customers. This practice otherwise referred to as demarketing is described as the efforts made at discouraging  certain customers on a temporary or a permanent basis.

 It is so sad that government officials at the National Assembly and the Central Bank of Nigeria (CBN) are not paying adequate attention to this ugly development which if left unchecked could damage the image of Nigerian banks and then provide opportunity for politicians with questionable characters to emerge core investors. If this development is allowed further, this again may worsen investors’ confidence which currently is at the lowest ebb as a result of forex crisis and premature sanction of certain banks by the CBN.

 History of demarketing in Nigeria’s banking industry

It will be recalled that demarketing in the banking industry was one of the factors considered by the CBN when banks were reduced from 89 to 25 to ensure a solid and standard practice. Hence, the ugly development  is not a new practice but  well pronounced before the appointment of Sanusi Lamido Sanusi as CBN Governor when some banks accused other banks of de-marketing them to gain undue advantage in the sector. Failure to enforce and implement circulars issued in the past  made the practice among the so called professionals to grow and then   became so disturbing despite several circulars issued in the past by the CBN. For instance, a CBN circular of April 2006 signed  by the Director of Banking Supervision, CBN, Mr. Ignatius Imala. Entitled, “The unethical and unprofessional practice of de-marketing”, the circular among other things  stated, “When the banking industry had 89 banks, some of the weak institutions made efforts to demarket others by circulating false distress lists and negative information all in the name of competition.  They were then warned at the Bankers Committee followed by CBN clarification to the public.

“With the emergence of 25 strong banks, post consolidation and the existing large terrain for all to professionally and profitably do normal banking business for the growth of the economy, such practice is not only unacceptable but condemnable.

“Information reaching the CBN indicates that the unethical and unprofessional practice of spreading false stories to de-market other banks has again started to emerge in the system.  This shows that that the industry still harbours some operators/officers who still conduct themselves unprofessionally.

Consequently, the CBN hereby warns the staff of all banks to desist forthwith from this condemnable and unethical practice.

All bank Chief Executive Officers are advised to IMMEDIATELY address all their staff members to heed this warning as any proven case of de-marketing by any means and spreading false rumours or negative comments against other banks will henceforth be sanctioned as follows:

“The bank officer(s) involved in the exercise will be dismissed and blacklisted for unethical and unprofessional behaviour, and

“The banks’ MDs/CEOs will be issued a letter of warning by the Governor of the CBN and the letter will be made public, while a recurrence could also lead to such CEOs receiving a stiffer sanction.

All are advised to comply in the interest of the industry and the economy. We are also inviting the general public to report any staff worker of a bank or banks involved in such unethical conduct to the CBN.

CBN’s circular in 2008

Dated October 21, 2008, and signed by Imala, it was also  entitled, “Circular to all banks   de-marketing of banks by other banks”. In the circular, the CBN, among other things stated.

“The CBN has again noted with serious concern the recent practice whereby some officers of deposit money banks engage in the de-marketing of other banks through disparaging comments and the use of negative text messages.   This development, which constitutes a threat to the safety and soundness of the banking system, is unprofessional, unethical and unacceptable.

“Banks and their staff workers are by this circular reminded that the responsibility for ensuring the safety and soundness of the banking system is a collective one for all stakeholders.   Banks are therefore advised to caution their staff workers on this practice as henceforth, any staff worker of a bank found to be involved in such an act will be summarily dismissed and blacklisted.

“Also, if another staff worker of the same bank is involved in such a practice, the institution will face severe sanctions including but not limited to a monetary fine of N10 million only. Appropriate channel will be opened by the CBN for the report of such unwholesome practice by bank customers and the general public.

“Furthermore, in the overall interest of the banking system, all banks are advised to enthrone an appropriate corporate culture that would guard against such practices in the future.”

 CBN’s action against   demarketing activities in 2016

 Recently, demarketing became a major instrument of attracting customers by certain officials of banks  by raising false alarm of distress particularly when the CBN appointed a new management to replace the board members of Skye Bank Plc over allegation of insider abuse which contributed to high figure of Non-performing loans (NPL). These unprofessional bankers  found it as a cheap strategy of informing would-be customers and those with existing accounts in Skye Bank that the bank is in distress and that there are other banks with the same status.

 Hence,  as a result panic withdrawals hit the system as customers of deposit money banks entertained fear of   losing money. To arrest the situation, the CBN issued a circular and a press  release signed by the Director of Communication Mr Isaac Okoroafor  to assure customers of Skye Bank Plc that the bank is not in distress.

 The CBN stated that banks in the country remain healthy and are coping very well with the sudden movement of public funds from commercial banks to the CBN under the Treasury Single Account initiative of the government.

 Challenges of CBN administration

Most disturbing was the poor management of the change in management of Skye Bank Plc. Even though the Chairman and other board members resigned, it was glaring that they were forced to resign. Information of stress texts released to the media in recent times  on Nigerian banks have also been identified by finance analysts as a major challenge which provided opportunities for unprofessional conduct in the banking industry. Before the issue will settle in the hearts of customers, the apex bank again released another bombshell concerning the suspension of nine banks from participating in forex transaction. The information  released to the media led to counter reactions by banks and the argument about the true intention of the apex bank.    The concerns of the public had focused on the objectives of such a ban at a time when forex scarcity had become a major challenge following the downturn in prices of crude oil and the implementation of TSA by the CBN which led to the withdrawal of funds belonging to  ministries, departments and agencies (MDAs)  from deposit money banks. The reconciliation of accounts as indicated in the press release issued by the management of First Bank Plc, Diamond Bank Plc, Heritage Bank, Fidelity Bank and FCMB revealed that there was an ongoing discussion. While some of the banks indicated that they were willing to pay the outstanding but could not do so due to the shortage of forex in the system and requested for payment of the balance in Naira denominations. The lifting of the ban last week on the eight banks suspended from forex transaction at least showed that the initial action was not properly managed and an indirect demarketing of these banks. It then became an argument if the rumour being circulated within the economy about distress was not another strategy by certain politicians to acquire some of the strong banks illegally through the backdoor.

 Assault on Heritage Bank

What is most disturbing is the fact that following the change in management of Skye Bank Plc, there had been orchestrated negative campaign against Heritage Bank. One of the areas of concern is the rumour that the bank is owned by the family of the Senate President Bukola Saraki even though the equity of Saraki’s is less than 10 per cent in Heritage Bank. However, investi-gations showed that the rumour was a contradiction of achievements recorded by the bank made up of professionals with several years of experience. For instance, the acquisition of defunct Enterprise Bank under a competitive bidding process by Heritage Bank and stress free integration remained a shock to certain operators based on the age of the bank and milestones recorded since the bank’s entry into the banking industry. Equally, the bank’s 2015 report  indicated Earnings of N24.2 billion and Profit after tax (PAT) of  N1.1bn. It will be recalled that Heritage was also appointed as partner for pilot phase of N3 billion Youth Innovative Entrepreneurship Development Programme (YIEDP). The programme was aimed at harnessing the latent entrepreneurial spirit among the teeming youths by providing timely and affordable loans to implement their business ideas. This further provided a sustainable mechanism to stimulate employment, contribute to the nation’s non-oil GDP, and address the challenge of youth restiveness. The bank within a short period of its entry also attracted Afrexim Bank investment of $150million. The rapid deployment of innovative technology-driven products and innovation in agency banking is another area  identified by various shareholders in patronizing Heritage. Today, Heritage is one of the few banks with true strong and unparalleled commitment and support for MSMEs in Nigeria. The above show that the bank is healthy and strong as against rumours of distress.

Stakeholders’ reaction

Reacting to purported attempts to de-market Heritage bank, a senior official of the CBN stated that “like most banks in Nigeria, Heritage Bank is learning to cope with the sudden decision of the Federal Government to domicile all public sector funds with the CBN under the Treasury Single Account (TSA) regime.

The official added that “other than this sudden movement of all public sector funds to the CBN, Heritage Bank remains one of the healthiest and well managed banks in Nigeria. It’s internal mechanisms and control are strong and the Bank has practically overcome the shock most banks suffered as a result of the domiciliation of all public sectors funds with the CBN following the full implementation of the TSA regime by the Buhari administration.”

Also reacting to the de-marketing threat in the banking sector, key shareholders of Heritage Bank Plc have described the de-marketing attempts as “most mischievous and totally out of order.”

A leading shareholder of the bank, Alhaji Musa Ibrahim Misau told journalists at a briefing in Abuja  that repudiated claims by an online media platform that the bank is co-owned by the former Chairman of Skye Bank, Dr. Tunde Ayeni and the Senate President, Dr. Bukola Saraki.

According to Alhaji Musa Ibrahim Misau “we are thoroughly miffed by an attempt by certain persons or groups, who do not mean well for the economy of our great country and indeed the economic agenda of our dear President, to negatively target Heritage Bank, a bank that the Central Bank of Nigeria and several local and international rating agencies have ranked among the healthiest banks in Nigeria, as a struggling bank. This is a glaring case of de-marketing and we have since drawn the attention of the CBN to this very dangerous trend,”

Alhaji Musa Ibrahim Misau stated that Tunde Ayeni has less than one per cent share in Heritage Bank and Bukola Saraki has no shares or any form of ownership stakes in Heritage Bank.”

Ibrahim Misau maintained that “it is not a secret that the owners and key shareholders in Heritage Bank bought off the defunct Societe Generale Bank (SGBN) which was owned by the Saraki Family. The Saraki Family were out-right bought out. The family, including Dr. Bukola Saraki do not have a dime in Heritage Bank. We have in just a few years built this bank to a colossus that has become the envy of the sector and we are not going to sit by and allow ill-intentioned persons to de-market Heritage bank. No, it will not happen,” he said.

The shareholders also decried suggestion by an online news platform that the CBN might be planning to sack the management and board of Heritage Bank. Ibrahim Misau said “it is far from the truth. The fact that Tunde Ayeni is a very marginal shareholder in the bank does not at all mean that what happened at Skye Bank would necessarily happen at Heritage Bank. The two banks are not in any way related, the two banks do not have similar ownership structure or management model.”

Tunde Ayeni he said had marginal shares in other healthy banks in Nigeria, “does that now mean that the CBN would sack the management and board of these banks as well? What is the basis of the claim by this online news medium that Heritage Bank is being targeted by CBN?” queried Alhaji Ibrahim. Recently, Heritage Bank was adopted by the CBN as the sole pilot bank.


As a journalist operating a corporate account at Heritage Bank, my personal experience of excellent service and attention to details is equal to none among other older banks within the industry. It is also one of the few banks where complaints by a customer is treated with utmost attention as a king. As a depositor with great confidence in the management and excellent services  being rendered nationwide in all the branches, the CBN should put in place strong mechanism to monitor and receive negative information that will frustrate growth strategies of Heritage bank and new banks to be licenced in the nearest future as a strategy to boost finance inclusion.

Analysts are of the opinion that officials of banks caught participating in demarketing should not be dismissed only but should be blacklisted from engaging in any gainful employment in the banking industry. They also suggested that the CBN should exercise caution in future before releasing information that could upset the system into the public.