The Central Bank of Nigeria, in conjunction with the Nigeria Deposit Insurance Corporation, on Friday, assured the depositors of distressed Skye Bank that they will not lose their funds.
CBN Governor, Mr. Godwin Emefiele, said this at a news conference, where he announced the revocation of Skye Bank’s operating licence.
According to him, “We wish to assure all depositors that under this arrangement that their deposits shall remain safe and that normal banking services shall continue with the new bank (Polaris Bank) on Monday, September 24, 2018, to enable customers to transact their businesses seamlessly.”
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The Managing Director and Chief Executive of NDIC, Alhaji Umaru Ibrahim, said that the option of a bridge bank was to ensure that the depositors of the bank were taken care of and deposits were not lost.
Ibrahim said that the bridge bank would also ensure that there would be no job losses as the new Polaris Bank would retain all staff of the distressed bank under a new contract.
The CBN on Friday revoked the licence of Skye Bank, transferring assets, liabilities, and management of the distressed bank to a newly licensed entity, Polaris Bank.
With the takeover of the bank by the CBN and the NDIC, the bridge bank, Polaris Bank, will be getting a single digit interest long term facility of N786 billion from the Assets Management Corporation of Nigeria.
Emefiele said the decision had been reached following the inability of the owners of the bank to shore up the capital of the distressed bank, which had earlier received a N350 billion intervention in July 2016.
“Skye Bank requires urgent recapitalisation as it can no longer continue to live on borrowed times with indefinite liquidity support from the CBN. We have decided to establish a bridge bank, Polaris Bank, to assume the assets and liabilities of Skye Bank. The strategy is for AMCON to capitalise the bridge bank and begin the process of sourcing investors to buy out AMCON. By this decision, the licence of Skye Bank is hereby revoked,” the CBN governor said.
Also, the management of the distressed Skye Bank would be retained to continue to manage the newly licenced Polaris Bank.
According to the CBN governor, given the good performance of the board and management, the CBN shall retain them.
Also, Emefiele said 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.
In his speech, the CBN Governor 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 banks 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.”
Continuing, he said, “The result of our examinations and forensic audit of the bank has, however, have 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 recapitalise it.”
