Exactly 27 months after it intervened in the ailing bank, the Central Bank of Nigeria (CBN) revoked the operating licence of Skye bank. To avoid a run on the bank, the CBN in consultation with the Nigeria Deposit Insurance Corporation (NDIC) has established and licensed Polaris bank to assume all assets and responsibilities of the defunct Skye bank.
The CBN and NDIC also disclosed at a joint briefing in Lagos, that 786 billion Naira has been injected into the new bank. Addressing journalists, CBN Governor, Godwin Emefiele said the strategy was for the Asset Management Company of Nigeria (AMCON) to capitalise Polaris Bank.
He recalled on July 4, 2016, the CBN took regulatory action on Skye Bank which led to the resignation of the chairman of the bank, non-executive directors on the board, the managing director, deputy managing director and two of the longest serving executive directors on the management team at the time.
According to Emefiele, the CBN’s actions was informed by unacceptable corporate governance lapses. He said “the focus of the action was to save depositors’ funds and to ensure that the bank continued as a going concern, being a systematically important bank. Part of our intention was also to stem the imminent job losses to staff, if liquidation option had been adopted”.
He added that “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 July 2016 era”.
The CBN Governor noted that the result of recent examinations and forensic audit of the bank revealed that the bank required urgent recapitalisation. Emefiele said the bank could no longer live on borrowed times with indefinite liquidity support from the CBN.
The Governor noted that “as a responsible and responsive regulator and in consultation with the NDIC, 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”.
Emefiele assured investors that their deposits shall remain safe under the new arrangement. He also said normal services will continue in the new bank on September 24, 2018. He noted that “thus all customers of Skye bank shall be automatic customers of the new bank and their accounts and records duly purchased by Polaris Bank”.
He concluded by saying “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”.