Businessday :: News you can trust

•Fleet of private jets maintained in foreign currency •Depositors live on less than a dollar per day

Chief executives of Nigerian banks award themselves stupendous compensation and bonuses touching new peaks and in several cases in excess of $1 million per annum, even when the banks tottered on the brink of collapse, a Business Day investigation has revealed.
In the last two weeks, a bank that failed the first CBN audit and which had been grappling with a monthly salary bill of N1 billion, ordered four units of GL450 Mercedes Benz jeeps for its CBN-appointed CEO and three members of the executive management. The vehicles are priced at N15 million each.
Although payment of wild bonuses is a common practice in the financial services sector, some of the banks that failed the stress test conducted by the Central Bank of Nigeria (CBN) have continued to hand out hefty bonuses to their top echelon according to our investigation.
Most of the banks that received huge CBN bailout money curiously paid their CEOs and top executives bonuses of between $200,000 and $500,000 apiece for 2008, according to one close source.
BusinessDay learnt how only one month ago, the CEO of a small sized bank awarded himself bonus of $500,000 while the executive directors got $200,000 each. The money was wired to their personal accounts abroad within 48 hours.
One former bank CEO told our reporters that it was also common for non-executive directors to be paid fantastic allowances by way of rentals and car maintenance and also provided unrestrained access to credit, especially for share trading as the CEOs sought to keep them quiet.
According to a survey by BusinessDay, the annual salary of a Nigerian bank CEO could be between N65 million and N80 million with one CEO getting as much as $1 million in basic salary alone.
A former top bank executive told BusinessDay how a CEO recently sacked by the CBN, earned as much as N200 million as salary and allowances annually.
According to him, “in many cases, the managing directors have several exotic cars in their pool of official cars, with at least one of them armour-plated and the executive directors were not left out”.
Curiously, this is happening in a country where over 60 percent of the population according to the World Bank, live on one dollar per day.
There is the issue of reporting and integrity of the published accounts of the banks given that not all of the bankers’ compensation was reported and it is usually split between the declared portion and the portion that is commonly concealed from the public. 
The publicly declared compensation for executive directors and bank CEOs is between $250,000 and $1.5 million per annum in naira terms, according to the advisory firm, Strasact Partners, formally known as Tax Ideas. The firm said typically, per diem is paid out in USD when the CEOs are outside Nigeria.
A senior executive of an advisory firm also gave an insight into how the bank chiefs structure their compensations and bonuses. He said, typically, a CEO’s pay will consist of a cash element made up of a base pay and allowances and a benefit element made up of such diverse benefits as cars, mouth-watering bonuses, a befitting house (arranged mortgage with zero interest) and a couple of domestic helps.
The bonus element is usually linked to the base pay and calculated on the basis of some bogus performance parameters and could be up to 150 percent of the base pay. This is similar for executive directors but in smaller quantum.
A significant portion of bank executives’ income or bonus is in form of some stock option, including share purchase loans (at discretionary interest rates). As stock option taxation is not well understood by tax authorities, this income is usually unreported.
There is also the movie star lifestyle of the bankers. This is reflected in the ostentatious lifestyle of the bank CEOs and underscored by the outrageous competition among the CEOs to get their banks to acquire private jets for their use.  
Several bank CEOs have at their beck and call, at least one Cessna Citation jet or HS 125-200 XP jet manned by foreign pilots, engineers and cabin crew, all paid in dollars and housed in top hotels. Because the jets carry foreign registration numbers, landing, parking and over-flight charges are billed in dollars. 
Anthony Owuye, a seasoned banker and financial expert, says, “all these bogus compensations started when the banks were out-competing themselves in posting billions of naira profit; when each bank wanted to be number one most profitable institution”.  
Owuye in an interview disclosed that traditionally and historically, banking as a business and professional practice was handsomely rewarded which was because the banker needed to be comfortable to be able to resist the temptation of tampering with customers’ money.