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CBN Announces Takeover of Skye Bank By Polaris Bank

The Central Bank of Nigeria has announced that it has revoked the operating license of Skye Bank, one of the country’s major commercial banks. This was disclosed by the CBN Governor Godwin Emefiele, at a press briefing held in Lagos on Friday.

Mr. Emefiele also revealed that the assets and liabilities of Skye bank were to be taken over by Polaris Bank, a ‘bridge bank’ set up by the Asset Management Company of Nigeria (AMCON), to keep the troubled institution’s activities ongoing until it is acquired by private investors.

The CBN says that its actions were prompted by the findings of a forensic audit of the bank, which showed that it was severely short of liquidity and required the intervention of regulatory agencies to save it. The takeover by Polaris will pave the way for a recapitalization of the bank by AMCON. In the meantime, Polaris has received ₦786 billion in prop-up support from the Nigeria Deposit Insurance Company (NDIC).

Skye Bank’s troubles came to light in July 2016 when some of its board members were forced to resign by the CBN. The CBN had cited Skye Bank’s “unacceptable corporate governance lapses” as a reason for this intervention. Although the apex bank says that Skye Bank’s performance had since improved, it still considers its situation uncertain enough to warrant a complete takeover by Polaris.

A number of noticeable changes have followed the acquisition of Skye Bank. For example, its previous twitter handle avatar has been replaced with one representing Polaris. Its website also appears to be undergoing maintenance, with a view to reflecting the new company name and logo.

The more significant changes have come at the business side of things. Authorities at the Nigeria Stock Exchange (NSE) have suspended the trading of Skye Bank shares. Ironically, the bank’s shares closed for Friday at a value 4.15% higher than it was worth the day before.

However, there hasn’t been a change in its top management team. The CBN says the current board has run the bank satisfactorily, and need not be replaced. This contrasts with the critical judgement passed by regulators on the preceding board in 2016, which forced the resignation of some of its members.

Branches of the old Skye Bank are also expected to open for business on Monday. According to the CBN, the change in the bank’s status shouldn’t disrupt regular banking operations.

Skye Bank came into existence in 2005 as the product of a merger of four banks: Bond Bank, Co-operative Bank, EIB International Plc and Reliance Bank. In 2014, it acquired Mainstreet Bank (formerly Afribank), which was in distress at the time. Analysts say that this acquisition may have weakened Skye Bank’s financial position. It’s also believed that an excessive exposure to bad debts may have rendered the bank’s situation untenable.

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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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