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Sierra Leone Business: Polaris Bank takes over Skye Bank Plc

Godwin Emefiele, middle, announces death of Skye Bank and birth of Polaris Bank

When the doors of the parent body of Skye Bank Plc in Nigeria opens today, Monday 24th September 2018 it will start to function as Polaris Bank. The drama started to unfold on Friday 21st September when the Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele announced in a press conference that the CBN had revoked the operating licence of Skye Bank Plc with immediate effect. This decision Emefiele said was reached after the owners of the bank could not re-capitalise the distressed bank which had been bailed out with a N350 billion intervention in July 2016. In his statement the Bank Governor said “You will recall that on 4th July 2016, we took a regulatory action on Skye bank Nigeria PLC” which led to the resignation of several top officials of the bank  He explained that “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.” He disclosed that “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.”

The Governor revealed that “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 recapitalise it.” Consequently he said “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 capitalise 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.” Skye Bank Plc was formed out of consolidation efforts of the banking industry by the Central Bank of Nigeria in 2005. The banks which were merged or consolidated 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. It is not yet clear what is the fate of Skye Bank Sierra Leone which is registered with the Bank of Sierra Leone as a separate entity, although there may be questions now about the status of its shareholders. It is expected that if investors buy out the bridge bank “Polaris” then the name of Skye Bank (SL) will eventually be changed.

Monday September 24, 2018.

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