The Central Bank of Nigeria (CBN) yesterday revoked the operating licence of Skye Bank Plc exactly 27 months after its intervened in the ailing bank.
However, in order to avoid a run on the bank, the CBN in consultation with the Nigeria Deposit Insurance Corporation (NDIC) have immediately established and licenced Polaris Bank, to assume all assets and liabilities of the defunct Skye Bank.
In addition, a total of N786 billion has been injected into the new bank.
The CBN and the NDIC disclosed this at a joint media briefing in Lagos.
Addressing journalists, CBN Governor, Mr. Godwin Emefiele said the strategy would be for the Asset Management Company of Nigeria (AMCON) to capitalise Polarise Bank and begin the process of sourcing investors to buy out AMCON.
He recalled that on 4th July 2016, the central bank took regulatory action on Skye Bank.
Specifically, the intervention by the regulator then, had led to the resignation of the erstwhile chairman of the bank, 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.
According to him, at that time, the action was informed by unacceptable corporate governance lapses as well as the persistent failure of Skye Bank to meet minimum thresholds in critical prudential and adequacy ratios, which then 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," Emefiele said.
Continuing, the central bank governor said the result of recent examinations and forensic audit of the bank however, revealed that the 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.
"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 the AMCON to capitalise the bridge bank and begin the process of sourcing investors to buy out AMCON," he said.
He assured 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 any 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," he said.
On his part, the Managing Director, NDIC, Alhaji Umaru Ibrahim said: "In continuation of the Central Bank of Nigeria intervention in the distressed Skye Bank Plc which started on the 4th of July 2016, and which was aimed at protecting depositors of that bank, the NDIC in exercise of its statutory powers under the NDIC Act 2006 and in consultation with the central bank has organised and incorporated a bridge bank known as Polaris Bank Limited to assume the deposits and other liabilities of Skye Bank Plc and acquire its assets.
"Consequently, Polaris Bank Limited has been issued operating licence by the CBN and shall commence banking business from today, Friday, 21st September.
"The operating license of Skye Bank has been revoked by the Governor of the Central Bank and the NDIC has commenced its liquidation.
"The capitalisation of Polaris Bank Limited is being done by the AMCON through the injection of about N786 billion to return the bank to soundness and profitability so as to enable its subsequent sale to credible and financially sound third-party acquirers.
"The NDIC carried out the bridged bank optionin order to make certain that its depositors are protected and the deposits with the PolarisBank Limited is insured under the NDIC Act."
Furthermore, he said the adoption of the bridged bank model for resolution of SkyeBank guarantees that most of the employees of that bank would not loose their jobs.
"The NDIC hereby assures depositors and customers of the defunct Skye Bank that their deposits are safe and hereby encourages all of them to continue to transact their businesses with Polaris bank."
Speaking on the status of Skye Bank on the Nigerian Stock exchange, Emefiele said the shares would be suspended henceforth till further notice.