Friday, 1 November 2013



“A sucker (fool) is born every minute”.
P.T. Barnum, 1810-1891, U.S. Circus Master
God must love suckers (fools) because he had created about 150 million of them in Nigeria alone. Then Professor Chukwumah Soludo apparently created 25 consolidated banks to relieve them of their money while pretending to help them keep the funds in “safe deposit”. After all, a fool and his money are soon parted.
It’s no longer News that Nigerian Banks are robbing their customers but the rate at which they do it these days is becoming alarming.
Innocent bank customers are being robbed everyday by a dubious banking system that capitalize on the ignorance of their customers as regards to banking rules and regulation to rob them of their hard earned money. It is on record that Nigerians are loosing more money to their banks than they loose to armed robbers and area boys put together. experience also shows that there is no account holders money with any Nigerian bank or financial transaction that involves a Nigerian bank and a customer that is not manipulated against the unsuspecting customer by the bank, especially when such banks discovers that such customer knows next to nothing about banking rules and regulations.
The consolidation indeed took banking in Nigeria to a new height. Within a space of few years the industry grew out of obscurity to become one of the fastest growing in the world. The then rapid increase in oil price, booming capital market and influx of foreign investments all conspired to ventilate banks’ ambitious growth plan. There was too much money to go round. So, contrary to the expectations of many, the post consolidation banks expanded rapidly, building more state-of-art branches faster than all the pre consolidation banks put together. In the process, they created jobs and employed some of the very best hands in the country, paying them fantastic salaries. Some of the banks combed through top universities in the world for Nigerian-born graduates, luring them with an out-of-Africa welfare packages. In no time, the Nigerian banks became the industry to watch and their CEOs became celebrities of sort, flying around in private jets and driving bullet-proof cars.
There was also a rapid increase in off-shore subsidiaries in countries like the United Kingdom, Ghana, and a host of other African nations. Some of these banks bought over big banks in smaller African countries like they were buying new cars, and re-branded them in their own names, and, in order to sustain their massive image they rushed to foreign advertising agencies for multi-million naira re-branding campaigns, aimed at putting them on the same level with their counterparts in South Africa and Europe. They jostled to sponsor programmes and advertised on CNN and foreign publications, spending additional millions in the process. But indeed, while the rapid transformations were well applauded by Nigerians and the world, the desperation and rivalry amongst the banks became a source of concern. There were worries about its implications both on the local economy and the depositors of the banks. Today, with the benefit of hindsight, it has become apparent that the whole buzz within the banking industry was not without extreme consequences. They became a burden too much for the weak legs of the banks to carry, and, as a result, certain procedures and practices seem to have become a norm for the banks, to the detriment of depositors and shareholders.
One Standard IBTC customer recently came to this realization after he had reasons to make seven ATM transactions in a single day; at the last withdrawal, his arithmetic mind came alive. He had lost N1120 (with N160 deducted for each transaction) of his savings in a single day of transaction to his bank. “If they repeat the process on 1000 customers in a day, it amounts to more than a million on ATM withdrawals alone,” he wonders aloud. Indeed, only N60 of each of the seven transactions accrue to the bank, yet it was still considered too high for a service that should normally come free. This perhaps is part of the motivation for the recent policy that bars customers from the banking hall when the transaction is below N60 000. This is why customers are worried; they complain that the ATM has become part of the rip-off tradition of banks. .
Besides, there have also been regular complaints of debit error, when customers get debited for uncompleted ATM transactions.
Aside the ATM related charges, customers are also deprived of part of their deposits through hidden charges and other deductions intentionally carried out without their knowledge; sometimes the deductions are so minute that it will take a very meticulous customer to discover. The charges are mostly packaged as interests on loan facilities, administrative charges, and interests on deposits plus sundry charges that are regularly shaved off from customers’ accounts without disclosure at the end of the day. Most of these charges and deductions come in minute bits and are spread over months and years thereby making it hard even for the most meticulous depositor to detect any irregularity or what a cashier in one of the banks described as “a minor computer error”
“Gone are the days when customers went to sleep. These days, they worry about their money in the banks because they understand that their funds are not in safe hands,” Jude Akpan, a newspaper contributor says regarding this.
A customer of First Bank of Nigeria recently narrated how GBP35 was slashed from his money each time remittance was made into his account by his relation in the UK. “I have received two tranches of pound sterling from my brother in the UK, and the bank deducted GBP35 on each of the transactions. My brother also paid commission to the remitting bank, and this excludes withdrawal charges, and account handling charges. It was not like this at the beginning of the year,” he states.
But since the banks know that most customers don’t scrutinize details of their bank statements, or bother to get a proof of its legitimacy, this provision is taken for granted. M2 gathered that these acts are direct consequences of the pressure on bank managers to deliver curious profits to the head offices at the end of each month. “Well, you may call it hidden charges, concealed charges or what ever … we must meet our set targets, and services rendered to our clients must be paid for, or do you expect us to do it for free? Any customer who finds that he or she has been overcharged or finds that money has been deducted from his account has the responsibility to make complaints and the issue will be resolved,” a staff of one of the banks remarks.
Some of the details that are manipulated include Commission on Turnover (COT), which represents the commission on withdrawals. By this the banks manipulate the interest charged the customers. “For example, the customer may agree to 18 per cent interest with the bank, before you know what is happening, due to the pressure on the bank officials, they change it to 45 per cent, knowing fully well that there is no way the customer will know; especially if the customer is doing very well. In fact, there is a common parlance in the banking sector today which goes like ‘Hit the man first. When you hit him, if he complains, you refund’,” Adeyemo states. Certainly, most Nigerians have been hit and they are not aware, especially those who secure bank loans. Most times they observe and grumble that the charges are abnormal but they can’t figure out why.
That is why more and more Nigerians are getting wary of bank loans. “My advice to people who are looking for loans is to steer clear of Nigerian banks. They will only end up compounding your woes with hidden charges that will make the real loan look like peanuts,” Ayoade Bolanle, an Ibadan-based customer, remarks. Ayoade advice is very appropriate for customers like James Bewaji, the Chairman of Ephybrand Nigeria Limited, who was once a victim. In July 2004, Bewaji took an overdraft facility of N50 million from Spring Bank. The facility was with a default interest rate of 35 per cent per annum. But through the distortion of the interest rates and sundry other excess charges by the bank, in five years, his company’s account was shaved to the tune of about N10 million.
Bewaji’s company keeps over 10 different bank accounts in different banks. “We are having problems with almost all of them…. A particular bank was made to return over a million naira to us. There is another one which we have even taken to court because they overcharged our account by about N8 million over a period of three to four years,” Bewaji reveals.
All banks in Nigeria overcharge their customers especially those enjoying one or more credit facilities. There are several ways by which customers can be overcharged but the most common ones are:
1. Calculating Interest with Rates Outside Monetary Regulations: One of the duties of the Central Bank of Nigeria is to determine interest rates applicable to all forms of bank facilities. Until December 2006 when Monetary Policy Rate (MPR) was introduced by the CBN, the interest rates were determined by CBN using Minimum Rediscount Rate (MPR). All the while, there had been certain interest margin allowed above the MRR/MPR for the banks to lend out funds. The interest programme is generally referred to as spread out all the banks violate this regulation.
2. Calculation of Debt Interest at an Unagreed Rate: Debit interest rates agreed with banks might not necessarily be the rate that is applied in the compilation of interest and charges. It is either a fraction f percentage less for more than a fraction less in some cases. The implication of this is that the account holder is denied of his income while the bank rakes in more income.
3. Calculation of COT (Commission-On-Turnover) COT calculation is one of the many means through which banks overcharge account holders especially the heavily active and voluminous accounts. There are about six classes of transactions exempted from COT charges but most of the banks do otherwise.
At times, because of the volume of transactions, you might have negotiated COT rate with your bank but several times, the bank use rates higher than the agreed rate in order to ‘jack-up’ the COT earnings.
4. Calculation of Charges on Overdraft and Excess Overdraft: Overdraft and excess overdraft are facilities given to proven account holders to withdraw beyond funds available in their accounts and overdraw beyond overdraft facility. In some banks and for some account holders, the stipulated overdraft limit does not mean that the account holder cannot exceed the limit but the amount by which the limit is exceeded (called excess overdraft) would attract a higher interest rate. In this case, the bank will apply dual rates for the overdraft charges. Contrary to this, some banks calculate the overdraft charges using the excess overdraft rate on both the overdraft limit and excess overdraft thereby overcharging the account holder on the overdraft limit.
5. Backdating of Debit Value/Effective Dates: Backdating of debit value dates is situation in which a withdrawal is considered effective on a date earlier than the transaction date. An example of this is when a withdrawal that took place on Friday 10th January, 2003 is said to be effective (i.e having value date) on Wednesday 8th January, 2003.
Backdating of value dates is grossly unfair when the account is running on overdraft facility as it makes account holder liable for debit interest on the backdated days.
6. Inclusion of Unknown Cheques: This is a situation in which a cheque (having the same human-interpreted serial number with your) issue by another account holder hit your account and hit the account of the owner at the same time. This situation is very dangerous when your account is running on steady overdraft facility with higher confirmation limit as you may not know when an unknown cheque is withdrawing funds from your account.
7. VAT on Interest /Overdraft Charges: By financial regulations, VAT is no chargeable on interest /overdraft charges payable to the bank but some banks do otherwise.
8. Using Unauthorized Rates for Miscellaneous Fees: Miscellaneous fees are charge outside COT, debit interest and credit interest. Every year, the Central Bank of Nigeria dictates the Miscellaneous fee (processing/renewal fees, facility fees, commitment fees, management fees, etc). and their rates. Contrarily most of the banks apply rates that are very well above the CBN rates for the miscellaneous fees and at a unauthorized frequency.
After a fruitless period of provisioning for bad loans, our bank has turned to their innocent customers to reap illegal and dubious profits to boost the bottom line, banks has now introduce on the counter charges that were not there before.
These rip offs by our banks are mostly catalog of charges disguised in scattered forms as interest on loan facilities, nebulous administrative charges, distortion of interests on deposits plus sundry other charges that are regularly shaved of customers accounts without disclosure.
At the end of every financial year, these little but regular amounts chopped off from various account holders runs into billions of Naira and form a major source of revenue for most of the banks in Nigeria today.
To be continued……
we specialize in helping Nigeria bank customers to trace and recover illegal and dubious bank charges from their past banking transaction and to educate then on their rights as bank customers because recent evidences has shown that Nigerian are loosing more money to their banks than they loose to armed robbers through illegal and dubious bank charges and gross violations of banking rules and regulation by our banks.


  1. i appreciate our effort to checkmate the crimes being commited my nigerian banks.

  2. If you hate the banks,then keep your money in the house