CBN Revokes Skye Bank’s Licence, Unveils Polaris Bank
The Central Bank of Nigeria (CBN), on Friday, revoked the operating license of Skye Bank Plc with immediate effect.
The CBN Governor, Mr Godwin Emefiele, disclosed this during a news conference in Lagos.
Emefiele said the decision was reached following the inability of the owners of the bank to shore up the capital of the distressed bank which had earlier received an 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 license of Skye Bank is hereby revoked,” he said.
Also the management of the distressed Skye Bank would be retained to continue to manage the newly licensed 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 are concluded. The shares had gained 4.05 percent to reach 77k on Friday.
The CBN took over Skye Bank Nigeria Plc on July 4, 2016,
The 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.
The News Agency of Nigeria (NAN) reports that with the takeover of the bank by the CBN and the Nigeria Deposit Insurance Corporation (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 (AMCON).
Also, the Managing Director and Chief Executive of Nigerian Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim said the option of a bridge bank was to ensure that the depositors of the bank are taken care of and deposits are not lost.
Ibrahim said that the bridge bank would also ensure that there would be no job losses as Polaris Bank would retain all staff of the distressed bank under a new contract.
You will recall that on 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 hemorrhage and restored depositor confidence.
Indeed, the bank’s performance has improved considerably compared to the pre-July 2016 era.
The result of our examinations and forensic audit of the bank has, however, revealed that 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.
Thus, all customers of Skye Bank shall be automatic customers of the new bank and their accounts and records duly purchased by Polaris Bank.
Given the good performance of the board and management, the CBN shall retain them. In addition, all employees of Skye Bank shall be absorbed by Polaris Bank under a new contract unless an employee decides to opt out.
We wish to assure the general public that the Nigerian banking industry remains safe and resilient and that the CBN will continue to live up to its responsibilities of promoting stability in the banking and financial system.”
About Skye Bank
Skye Bank Plc which has metamorphosed into Polaris Bank was a product of the merger of five legacy banks as a result of the banking industry consolidation and recapitalisation exercise of 2005. The legacy banks were Prudent Bank Plc, EIB International Plc, Bond Bank Limited, Reliance Bank Limited and Co-operative Bank Plc.
Following the merger, the bank opened three West African subsidiaries in Sierra Leone, Gambia and Guinea.
In 2014, the bank won the bid to acquire the 100 percent ownership stake of Asset Management Corporation of Nigeria (AMCON) in Mainstreet Bank Limited, a deal which made Skye Bank one of the top four banks in Nigeria. But the move may also have undermined its books as the bank was taken over by the CBN in 2016.
The defunct bank is quoted on the Nigerian Stock Exchange (NSE) with over 450,000 shareholders.