Promotions, lay-offs as UBA effects corporate right sizing

One of Nigeria’s largest banks and largest by employees, United Bank of Africa has reportedly laid off several of its employees in a move viewed as corporate right-sizing. Nairametrics confirmed this situation from sources within the bank.

Earlier on Saturday, Social media reports indicated that the bank had sacked “thousands” of employees. Nairametrics reached out to the bank to confirm reports however we were informed that the bank had rather employed over 4,000 staff and promoting over 5000.

“According to the bank, “over 5,000 staff of the United Bank for Africa (UBA) Plc, started the new year with a lot of cheer as the bank yesterday announced its promotion to new grades as well as salary upgrades with immediate effect this January.”

“Those who are beneficiaries of this exercise will receive up to 170% increase in their salaries and benefits, whilst a good number have been moved to higher grade levels.”

“In a massive recruitment drive, over 4000 new staff members resumed in the last week of December 2019 in Nigeria alone at the bank. UBA currently stands as the highest employer of labour amongst Nigerian banks with a staff strength of close to 20,000.”

The bank made no mention of any mass sack or retrenchment. The bank also did not provide details on which staff was affected by the pay rise, however, Nairametrics understands that reduction in grade levels from 16 to 12 may have led to an automatic promotion of some staff thus an increase in their salaries. Some employees of UBA contacted however confirmed that they are yet to receive official letters.

UBA Headcount: A recent Nairamertrics report indicates salaries and wages of some of Nigeria’s largest corporations topped N631 billion at the end of 2018 representing a 22% growth from the N515.8 billion recorded in 2015. As expected, the Banking Sector led with about N402.2 billion in 2018 representing a 15.8% growth when compared to our baseline year of 2015.

In terms of headcount, the banking sector employed about 50,136 employees compared to 49,674 jobs in 2015 representing a net job created of just 462. As of 2018, UBA had the most employees with 12,889 staff some of which also reside outside Nigeria. Its 2019 half year audited results show the bank has about 13,124 employees out of which 7218 are male and 5,906 female.

Recent data from the National Bureau of Statistics reveals banks employed about 104,669 employees in 2018 out of which 45,238 were contract staff. This perhaps explains the low net jobs created data as banks now channel most of their job creation to casual staff.

In UBA 2018 annual report, the bank reported salaries and wages of N68.4 billion second only to FBNH with about N81.8 billion. The bank’s salaries and wages bill has risen 23.6% since 2015 one of the highest in the sector.

Industry Remuneration: Sources within the bank also indicate staff has been complaining for years about the level of their salaries and wages when compared to other FUGAZ banks. For example in 2018, out of UBA’s 12,880 employees, only 8% or 1,024 earn about N9 million, the lowest in the sector.

Bank Total Staff Highest paid Highest Pay Range %age
First Bank           9,158           2,352 Above N9m 26%
UBA         12,880           1,024 Above N9m 8%
GT Bank           5,366              505 Above N8.6m 9%
Access Bank           4,273           1,207 Above N9m 28%
Zenith Bank           7,594           1,938 Above N9m 26%


UBA’s decision to right-size might, however, be an effort to restructure its payroll to ensure the bank employees remain rather than losing them to other competitors. Nigerian Banks have recently increased their preference for contract staff. According to the National Bureau of Statistics in September 2019, the number of contract staff across Nigerian banks was about 43,180 from 22, 576 in the first quarter of 2016.

What this means: For shareholders and investors, the latest move might be viewed positively provided it’s aligned to help the bank compete in an increasingly difficult space where talent is scarce and expensive. 2019 9 months results indicate UBA currently spends 12.86% of its Gross earnings on personnel expenses compared to 11.6% for Zenith Bank and 8.3% for GT Bank.

A cursory review suggests the bank’s personnel expenses are in line with competitors. However, sources within the bank indicate that the challenge could be the bank’s wage structure suggesting perhaps this is why the bank has taken the bold step to fix it.

UBA reported a pre-tax profit of 98.3 billion in its 2019 9 months results compared to N79.1 billion a year earlier. The bank’s share price fell by 7% at the end of 2019.

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