The management of Union Bank Plc is planning to reduce operating costs by N1 billion over to next one year, Mrs Funke Osibodu, the managing director of the bank said.

Osibodu noted that  the cost management strategy embarked upon by the new management of the bank recently is expected to culminate in the saving of N300 million on purchase of diesel for the head office of the bank over the next one year. Already, about N30 million has been saved on diesel for the head office alone in two months and by the time the cost management strategy is extended to other branches of the bank, over N300 million would be saved over the next one year, Mrs Osibodu and two of her executive directors made these known during an interactive session with the media.

Mr Adebisi Shonubi, executive director operations, technology and services, said rather than toe the line of the old order by buying diesel from distributors, Union Bank has since the new management came on board, been purchasing diesel directly from the importers, thereby reducing costs.

Besides, he noted that about N145 million was also saved by the bank for purchase of new computers. Instead of buying new ones as had always been the case, Shonubi, said the bank had to approach the manufacturers and asked them to refurbish existing ones at N5 million and still achieve same results.     “On the average, we use about two tankers of diesel in this building in a week. We were buying diesel from distributors. Meanwhile, all the people who import diesel into this country have account with us. It meant we were paying more for the diesel than we could have gotten taking to our existing customers who are directly importers.

“We would have turned the business over in our customer’s account to make them happier with us but we were not doing that. Immediately we started doing that since August, we have saved over N20 million just on item and that is on this building.

We expect that by the time we roll it out to other branches, and the other cost cutting things that we want to do on the energy alone, we should be looking at about N200 million,” he said. Shonubi said the institution had a mandate by its Group Managing Director to cut operating expenses by about 30 per cent. Executive Director, commercial and Retail Banking/Consumer Banking, Mr Adekunle Adeosun, said a e-mial culture has been instituted to improve on turn around time.   

Previously, a customer’s request could take two to three weeks to complete, he said.  With the e-mail system however, he said that could be achieved within 24 hours. “What we have done is improve turn around time. Our system is very old-fashioned. A request for customer stakes two to three weeks to complete the process. We are instituting an e-mail culture. Every staff has an e-mail address, so why we couldn’t use it is just an attitude and leadership thing. We have reinstituted it and the staff are embracing and using it. We are not only cutting costs in terms of cartridge, we are also helping the environment by cutting the use of paper, he said.

He, however, admitted the fact that only 45 to 50 per cent of its Automated Teller Machines (ATMs) were working properly. He said there is an ongoing process to revamp the machines and enhance their uptime, in view of their relevance in modern banking business. He said there are plans to outsource the distribution of its cheque books, stressing that the online order system has now been put in place.

Giving an update on the loan recovery efforts of the bank, Mrs Osibodu said the bank has recovered N31 billion and that the bank came from Transcorp, she explained, N600 million was in cash from government, while the remaining was in promissory notes, earning interest of 8.6 per cent per annum for the bank.

The GMD also revealed that the bank’s liquidity ratio had at different intervals reached a peak of 42 per cent. The stipulated liquidity ratio for all banks in the country is 25 per cent.   On the alleged face-off  between the bank and some labour unions over issues bothering on retirement and retrenchment benefits, the President, Union Bank Association of Senior Staff (UBASS), Mr Fred Ojeh, who was also in attendance, said the relationship between the union and new management has been cordial.

“The relationship here has been so cordial, I must confess, and if there are grey areas we sit down and talk it over. We support in totality all the actions of the new management to bring the bank back to Eldorado and we hope more will be done?”

“Nobody will picket Union Bank without our consent. The other faction of Association of Senior Staff of Bank, Insurance and Finance Institution (ASSBIFI) are not representing our interest,” he said. Head, Human Resources, Union Bank, Mr Mike Iyella, pointed out that the bank is committed to engage the union in positive dialogue over any issue that may arise.