By BUKOLA IDOWU, Lagos
The Central Bank of Nigeria (CBN) has revoked the licence of Skye Bank, following the inability of the owners of the bank to prop up its capital.
Accordingly, the apex bank transferred the liabilities, assets and management of the distressed bank to a newly licenced entity, Polaris Bank. With the takeover of the bank by the CBN and the Nigeria Deposit Insurance Corporation (NDIC), Polaris Bank, which is the bridge bank, will be getting a single digit interest long-term facility of N786 billion from the Assets Management Corporation of Nigeria (AMCON).
The option of a bridge bank is to ensure that the depositors of the bank are taken care of and deposits are not lost.
In the new order, the bridge bank will also ensure that there are no job losses, as Polaris Bank has been mandated to retain all staff of the distressed bank under a new contract.
Also, the management of the distressed Skye Bank will be retained to continue to manage the newly licenced Polaris Bank. Speaking at a press conference to announce the revocation of Skye Bank’s licence, the governor of the CBN, Godwin Emefiele, said the decision was reached, following the inability of the owners of the distressed bank to shore up its capital, it had earlier received a N350 billion intervention in July 2016. The CBN governor said given the good performance of the board and management, the CBN would retain them.
Emefiele hinted that based on discussion with the Nigerian Stock Exchange, the shares of the distressed Skye Bank would be suspended from trading on the capital market until discussions were concluded. He said, “On the 4th July 2016, we took a regulatory action on Skye bank Nigeria PLC. Specifically, this action led to the resignation of the chairman, all non-executive directors on the board as well as the managing director, deputy managing director and the two longest-serving executive directors on the management team. “At that time, the proactive action was informed by unacceptable corporate governance lapses as well as the persistent failure of Skye Bank PLC to meet minimum thresholds in critical prudential and adequacy ratios, which culminated in the bank’s permanent presence at the CBN Lending Window. “The focus of the action then was to save depositors funds and to ensure that the bank continued as a going concern, being a systemically important bank. Part of our intention was also to stem the imminent job losses to staff if a liquidation option had been adopted. These objectives have been fully achieved and the bank has been able to meet customer obligations, having curtailed the liquidity haemorrhage and restored depositor confidence. Indeed, the bank’s performance has improved considerably compared to the pre-July 2016 era. Announcing the revocation of the bank’s licence, Emefiele stated: “The result of our examinations and forensic audit of the bank has, however, revealed that the Skye Bank requires urgent recapitalisation as it can no longer continue to live on borrowed times with indefinite liquidity support from the CBN. The shareholders of the bank have been unable to recapitalize it.
“As a responsible and responsive regulator and in consultation with the Nigerian Deposit Insurance Corporation (NDIC), we have decided to establish a bridge bank, Polaris Bank, to assume the assets and liabilities of Skye bank. The strategy is for the Asset Management Company of Nigeria (AMCON) to capitalize the Bridge Bank and begin the process of sourcing investors to buy out AMCON. By this decision, the licence of the defunct Skye Bank is hereby revoked. “We wish to assure all depositors that under this arrangement, their deposits shall remain safe and that normal banking services shall continue in the new bank on Monday, 24th September, 2018, to enable customers to transact their businesses seamlessly. On his part, the NDIC boss said the decision the decision was the outcome of CBN’S intervention in the distressed Skye Bank Plc, which started on July 4, 2016 and which was aimed at protecting depositors of the bank.
He noted: “The NDIC in exercise of its statutory powers under the NDIC Act 2006 and in consultation with the central bank has organised and incorporated a bridge bank known as Polaris Bank Limited to assume the deposits and other liabilities of Skye Bank Plc and acquire its assets. “Consequently, Polaris Bank Limited has been issued operating license by the CBN and shall commence banking business from today, Friday, 21st September. The operating license of Skye Bank has been revoked by the governor of the Central Bank and the NDIC has commenced its liquidation. “The capitalisation of the bridge bank is being done by AMCON through the injection of about N786 billion to return the bank to soundness and profitability so as to enable its subsequent sale to credible and financially sound third party acquirers. “The NDIC carried out the bridge bank option so as to dissolve the Skye Bank plc and to make certain that its depositors are fully protected and the deposits with Polaris Bank Limited remain insured under the NDIC act and that the customers of Skye Bank can continue to transact their business with Polaris Bank Limited, thereby ensuring non disruption of their banking transactions.
“The adoption of the bridge bank model for the resolution of Skye Bank guarantees that most of the employees of that bank will not lose their jobs and that they will continue with their employment with Polaris under a fresh contract with Polaris. “The NDIC, as a deposit, insurer acted to ensure the continuous safety of depositors funds in furtherance of the regulatory authorities resolve to proactively manage the potential threat to financial stability.