CBN revokes Skye Bank’s operating licence, renames it Polaris Bank
The Central Bank of Nigeria on Friday revoked the operating licence of Skye Bank Plc. Governor of Central Bank, Godwin Emefiele, made the announcement at a press briefing in Lagos. He also said a bridge bank known as Polaris Bank had been created to assume the assets and liabilities of the defunct bank. Emefiele said the decision to revoke the licence of the old bank was taken following the inability of the owners of the bank to shore up the capital of the distressed bank which had earlier received a N350bn intervention in July 2016.
He said, “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.”
Emefiele recalled that on July 4, 2016, the CBN took a regulatory action on Skye Bank that led to the resignation of its chairman, all non-executive directors on its board as well as the managing director, deputy managing director, and the two longest-serving executive directors on the management team. At that time, he added, the action was informed by the unacceptable corporate governance lapses as well as the persistent failure of the bank to meet minimum thresholds in critical prudential and adequacy ratios, which culminated in the bank’s permanent presence at the CBN lending window. He explained that the result of its examinations and forensic audit of the bank revealed that it required urgent recapitalisation.
He said, “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.” Emefiele said these objectives had been fully achieved, with the bank able to meet its customers’ obligations, having curtailed the liquidity haemorrhage and restored depositors’ confidence. According to him, the bank’s performance has improved considerably compared to the pre-July 2016 era. He said, “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 business seamlessly.” He added that all customers of Skye Bank would be automatic customers of the new bank and their accounts and records duly purchased by Polaris Bank. Given the good performance of the bank’s board members and the management team, Emefiele said the CBN would retain them. In addition, he added, all employees of Skye Bank would be absorbed by Polaris Bank under a new contract unless any employee decided to opt out.
He also said that trading on the bank’s stocks was temporarily suspended, pending the outcome of the CBN and AMCON’s meeting with the Nigerian Stock Exchange and the Security and Exchange Commission. The Managing Director, Nigeria Deposit Insurance Corporation, Umaru Ibrahim, said the latest action was in continuation of the CBN’s intervention in the distressed Skye Bank, which was aimed at protecting depositors of that bank. He said the deposits with the Polaris Bank had been insured under the NDIC Act and the customers of Skye Bank could continue to transact business with the new bank. Ibrahim said, “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.