The Central Bank of Nigeria (CBN), was working on modalities that would put a cap on what bank executives in the country could earn.
Africa’s richest directors
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).www,mannastores.com
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”.
Nigeria’s highest paid directors
According to the company’s 2010 annual reports, directors of First Bank who collectively received a remuneration of N3.66 billion are the highest paid in the country. Their remuneration of 2010 was an increase from the N599, 000,000 they earned in 2009.
The second highest paid bank directors in Nigeria in 2010 were those of GTB. Cumulatively, they earned N850, 536,000 during the period, which is N208, 095,000 more than the N642, 441, 000 they pocketed in 2009.
Directors of the United Bank for Africa (UBA) received a total remuneration of N764, 000,000 in 2010, that is a 103.2% increase of their 2009 total package of N376, 000,000.
But there are also bank directors whose pay took a dive in 2009. For instance, Union Bank directors earned a total of N736, 000,000, which is N33 million short of their 2009 earnings. Stanbic IBTC Bank executives suffered a similar fate. The directors earned N788 million in 2009 but had to take a cut last year. They earned N720 million cumulatively in 2010.
Coming closely behind Stanbic IBTC Bank is First City Monument Bank, whose directors earned approximately N628 million in 2010, which is an increase of almost N24 million from their remuneration in 2009.
The amount paid to Zenith Bank’s directors in 2010 dropped by N141 million last year. In 2010, the bank’s directors collectively received N604 million in sitting allowances, compensations and retirement benefits while in the preceding year the amount was N745 million.
But unlike Zenith Bank, Diamond Bank directors’ pay climbed from N218.4 million in 2009 to N342.3 million in 2010.
Skye Bank’s directors’ remuneration in the year remained unchanged from what they earned in 2009. Their total remuneration was N280 million. Access Bank’s director’s remuneration was increased by 37 per cent. In 2010, they were paid N262 million while they got N191.4 million in the preceding year.
Eco Bank directors collectively got a downward review of their remuneration. In 2009, they received N293 million, as opposed to 2010 when they got N228 million. Fidelity Bank directors got a 100 per cent increase of their 2009 remuneration. In the year under review, they were paid N222 million as opposed to the N111 million they received in 2009.
Directors at Sterling Bank and Wema Bank are the least paid. In the year under review, Sterling Bank’s directors got a total of N129.4 million, which is a reduction of N21 million from what they got in the preceding year.
Directors at Wema Bank got a marginal boost of N12 million of their 2009 remuneration (N98.3 million). In 2010, they received N110.2 million as executive compensation, fees and allowances.
Our analysis does not include reports of the five rescued banks - Bank PHB, Oceanic Bank, Intercontinental Bank, Spring Bank, and Finbank.
On enquiry at these banks, we were told that only 2008 annual reports were available.
| BANKS | HIGHEST PAID DIRECTORS | CHAIRMAN | TOTAL REMUNERATION |
| First Bank | N65 Million | N5 Million | N3, 669, 000, 000.00 |
| Guaranty Trust Bank | NA | NA | N850, 536, 000.00 |
| UBA | N57 Million | N6 Million | N764 Million |
| Union Bank | N49 Million | N6 Million | N736 Million |
| Stanbic IBTC | N177 Million | N36 Million | N720 Million |
| FCMB | N48.1 Million | N4, 758, 000 | N627 Million |
| Zenith Bank | N37 Million | N11 Million | N604 Million |
| Diamond Bank | N32.4 Million | N14.4 Million | N342.3 Million |
| Ecobank | N38 Million | N7 Milliion | N295 Million |
| Skye Bank | N25 Million | N2 Million | N280 Million |
| Access Bank | N39 Million | N9.3 Million | N261, 663, 000.00 |
| Fidelity Bank | N31 Million | N6 Million | N222 Million |
| Sterling Bank | N26.3 Million | N4.2 Million | N129, 460, 000.00 |
| Wema Bank | N8.5 Million | N6. 26 Million | N110.18 Million |
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