When news of the sudden take-over of Skye Bank and its replacement with a bridge bank, Polaris Bank Limited, broke on Friday 21, September 2018, Nigerians reacted to the development with trepidation.
The announcement by the Central Bank of Nigeria (CBN) to the effect that Skye Bank ceased to be, and Polaris Bank was born, not only jolted the banking community but even investors as a result of precedence going by the losses that customers, staff and shareholders of defunct Savannah Bank and Societe Generale Bank of Nigeria incurred.
In the past years, Skye Bank had been troubled due to serial corporate governance lapses and liquidity challenges under the previous, according to CBN governor, Godwin Emefiele. Among the challenges were insider trading, non-performing loans, non-compliance with the remission of government’s funds to the Treasury Single Account (TSA) which attracted a stiff fine from the CBN, and a host of other infractions. It was the only bank known to have made a loss in 2015.
It came as no surprise, therefore, when the CBN in collaboration with other regulators – Nigeria Deposit Insurance Company (NDIC) and Asset Management Company of Nigeria (AMCON) – liquidated Skye Bank and established Polaris Bank in its stead. The new bank also automatically absorbed the assets, liabilities and obligations including customers and employees of the old bank.
Despite assurances of the safety of depositors’ funds and job security for employees of the former bank given by the regulators, a torrent of ill-informed media reports and commentaries about the regulatory action followed, thus heightening despair among stakeholders of the bank, especially customers of the bank.
A customer of the bank, Cynthia Eronmosele, said her initial fear was that her entire life savings in the old bank had gone down the ocean. Speaking with this reporter, she said that was the only account which she also uses for her business. She, however, got a relief when she got to her branch and found that her deposits were intact.
“I run a hair salon and this is the only account I’ve had and operated for the past seven years. When I heard the news of the takeover, I was afraid that all my money was gone. Now, I still have access to my funds and I have been operating my account without stress,” she said.
In line with regulatory requirements, newly- incorporated Polaris Bank, which acquired all assets and liabilities including staff and customers of defunct Skye Bank, was tasked with the responsibility of injecting new life into the entity and rebuilding customers’ confidence. It was also to stem looming job losses, meet customer obligations, entrench sound governance practices, curtail liquidity haemorrhage, improve performance and ensure a smooth sail moving forward.
Polaris Bank is also to continue the operations of the defunct bank and make it solvent in readiness for its acquisition by new equity investors by the set timeline of 2023.
While the mandate may appear daunting for Polaris Bank, to ensure its sound footing, AMCON immediately recapitalised it with N786 billion. By this action, Polaris Bank became a nationalised, government-owned entity, as opposed to publicly quoted status of its predecessor who’s equities were listed on the Nigerian Stock Exchange (NSE).
To assume this role effectively and achieve the set objectives, Polaris Bank Limited was also incorporated as a legal entity authorised to offer banking and financial services with its registration number on CAC Register as RC 1525101.
Investment analysts have commended the regulators for the prompt rescue action on troubled Skye Bank. Dave Adeleye, an investment banker with over 20 years’ experience, believes that the bridge bank is on a sure footing, and the measures already put in place by the regulators are right steps in the right direction.
“The former Skye Bank had shown signs of not being totally healthy, so it was no surprise when the CBN announced its liquidation and the establishment of Polaris Bank as the bridge bank. With the new structure coming in place, I am confident that it would be a smooth sail from here. I believe that the injection of funds into the new bank will ensure the safety of depositors’ funds and bring about a sense of confidence in the banking system,” he said.
The CBN had also announced the retention of the board and management team appointed by it in July 2016 to run the affairs of the new bank in the transition phase.
Led by the group managing director/CEO of the bank, Tokunbo Abiru, the management of Polaris Bank has pledged its commitment to deliver on its mandate to all stakeholders while appreciating its customers for their continued patronage, support and loyalty.
He added that the team would continue to consolidate on the success recorded from July 2016 when it successfully ensured the stability of the former bank in the wake of CBN’s earlier action that necessitated the appointment of the current board of directors chaired by highly-respected Alhaji Muhammad K. Ahmad and the management team under his leadership.
Abiru stated further that Polaris Bank is adequately capitalised and has the support of the regulators to succeed, adding that depositors can continue to transact business uninterrupted and are also encouraged to maintain their deposits and banking relationships with the bank without any apprehensions.
“You will recall that when the intervention was done in July 2016, there was a major run on the operation of Skye Bank, and part of what we have been able to do is to find a way to stabilise the bank.
“In the past few weeks, we have brought a sense of corporate governance to the operation of the bank, and we have also been able to recover loans owed by debtors substantially. As we speak, we have been able to recover over N100 billion; that is a significant achievement,” he stated.
CBN governor, Mr. Emefiele had attributed the regulatory action on Skye Bank to serial poor corporate governance issues in which N2.2 trillion worth of banking assets were lost coupled with the inability of shareholders to recapitalise the bank.
The regulators have expressed hope, however, that AMCON would be able to sell Polaris Bank to new equity investors before 2023, its sunset year; otherwise, its ownership will be transferred to CBN and Federal Ministry of Finance – both owners of AMCON.
And with the positive testimonials already manifesting just a few weeks after the September 21 regulatory action, confidence in the new bank is reportedly gaining ground faster than expected if past experiences were anything to go by. Of course, everyone is waiting on Tokunbo Abiru, who has been dubbed ‘the miracle-working banker’ to show his stuff again.
While the financial services sector and indeed the nation await the full evolution of the new Polaris Bank, the precedent set by the management and staff of the bank in winning depositors’ confidence speedily will go down in modern day history of the banking sector in Nigeria as a class act worth studying.
Shareholder groups across the country have reacted bitterly to the takeover of Skye Bank Plc following the revocation of its operating license by the Central Bank of Nigeria, CBN, on Friday, September 21, 2018.
The CBN had revoked the operating license of the bank and subsequently transferred its assets and liabilities to a newly licensed bridge bank called Polaris Bank Limited.
Godwin Emefiele, the CBN governor, at a news conference in Lagos said the decision was due to the failure of its shareholders to recapitalize the bank.
“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 capitalize the bridge bank and begin the process of sourcing investors to buy out AMCON,” Emefiele said.
He, however, assured all depositors that under the arrangement, their deposits shall remain safe and that normal banking services shall continue in the new bank on September 24, 2018.
NDIC has sold Polaris Bank to the Asset Management Corporation of Nigeria, AMCON, with the mandate to stabilize the bank as well as return it to profitability for the purpose of selling it to interested investors. Consequently, AMCON will inject N786 billion into Polaris Bank to bring its net value to zero.
Miffed by the decision of the apex bank, shareholders have threatened to challenge what they described as illegality and impunity on the part of the CBN and other regulators in the financial service sector. Speaking in an interview with our correspondent, National President, Constance Shareholders Association of Nigeria Mallam Shehu Mikail, faulted the CBN’s claim that shareholders refused to recapitalize the bank.
“Since the composition of the interim board by the CBN in 2016, shareholders have been kept at perpetual suspense. There has been no board meeting whatsoever. I recall that it was the apex bank that constituted the interim board of the bank in 2016. It also extended its tenure for another two years.
There’s no transparency in the management of the bank thus far. No due process was followed by the parties involved. We are determined to fight this to the end because we see this as undue intimidation by the CBN and other agencies of government,” he stressed.
Also reacting to the Skye Bank takeover, National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, who said shareholders have been vindicated by CBN’s action, recalled that shareholder groups warned against the acquisition of Mainstreet Bank, noted that such action may have sounded the death knell on Skye Bank.
“Shareholders’ funds were used for the acquisition there was no bond raise or bond issue as the case may be. So this was what plundered the bank’s fortunes. I can assure you that shareholders are determined to speak with one voice and take up the CBN.
Although we are in court already over the acquisition of Afribank and others, and we are willing to challenge this fresh illegality by the CBN in the court of law,” he stressed.
Okezie further maintained that the shareholder groups will rally all other stakeholders to challenge the decision of the CBN and other sister agencies and ensure that “justice is not only done but seen to be done on the matter.”
Echoing similar sentiments, Sir Sunny Nwosu of Independent Shareholders Association said the CBN statement on the takeover of Skye Bank smacks of insensitivity on the part of the regulator.
“The announcement of the withdrawal of license and takeover of Skye Bank by the CBN sent the wrong signal out there. CBN ought to have been able to manage the situation well,” he said.
Nwosu who did not foreclose the possibility of taking legal action against the CBN and others said, shareholders, await further explanation from the regulators in order to know the next line of action.
Source
As the financial institution formerly known as Skye Bank goes under, the Central Bank of Nigeria has announced that a new bridge bank, Polaris Bank will take over the operations and serve customers.
In his speech which announced the dissolution of the troubled Skye Bank, CBN Governor Godwin Emefiele revealed that Polaris Bank will assume the assets and liabilities of the now defunct bank.
Having received a capital injection of three-thirds of a trillion naira just over two years ago, the CBN determined that the bank did not stand a chance of meeting its shareholder obligations and intervened to forestall a total crash of the bank.
The new bank by the CBN and the Nigerian Deposit Insurance Corporation (NDIC) was then formed with a view to stabilize the operations of the troubled bank and continue to serve its board and customers.
On Friday, Nigeria’s Central Bank revoked the operating license of one of the country’s largest banks and handing it over to a newly formed institution, Polaris Bank.
Godwin Emefiele, the governor of the CBN announced the withdrawal at a press briefing; saying that the bank could no longer service its shareholders despite receiving a 350 billion naira intervention in July 2016.
The announcement came as a shock to many observers whose concerns may have been assuaged when only this past April, the CBN passed a vote of confidence on the board of the bank and gave it an additional two years to steady the ship of operations.
According to Emefiele,
“The result of our examinations and forensic audit of the bank has, however, revealed that Skye bank requires urgent recapitalization 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 recapitalize it.”
The Central Bank of Nigeria has withdrawn the operating license of Skye Bank. Umaru Ibrahim, chairman of the Nigeria Deposit Insurance Corporation (NDIC), made this known to journalists on Friday, September 21, 2018.
Umaru said the NDIC in collaboration with the Central Bank of Nigeria (CBN) has approved that a bridge bank will be established.
Addressing journalists, Godwin Emefiele, CBN governor, said the bridge bank, Polaris Bank, will take on the assets and liabilities of Skye Bank.
“Consequently, Polaris Bank Limited has been issued operating license by the CBN and shall commence banking business from today, Friday, 21st September,” Umaru said.
“The operating license of Skye Bank has been revoked by the governor of the Central Bank and the NDIC has commenced its liquidation.
The capitalization of Polaris Bank Limited is being done by the Assets Management Corporation of Nigeria 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.”
Emefiele said that although the bank’s performance improved after July 2016 when the Assets Management Corporation of Nigeria and the CBN stepped in.
“The result of our examinations and forensic audit of the bank revealed that the Skye Bank requires urgent recapitalization as it can no longer continue to live on borrowed times with indefinite liquidity support from the CBN.
“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 ensure customers to transact their businesses seamlessly.”
The shares of Skye Bank will be temporarily suspended on the Nigerian Stock Exchange and Polaris Bank will begin operations on Monday in all Skye Bank offices.
The CBN has approved the reconstitution of the Board of Skye Bank PLC. By the reconstitution, Alhaji M.K Ahmad has been appointed as the new Chairman of the Board, while Mr. Tokunbo Abiru has been appointed as the new Group Managing Director and CEO. Messrs.
Other members of the reconstituted Board are Bayo Sanni, Idris Yakubu, Markie Idowu and Abimbola Izu, all of whom were serving in the capacity of Executive Director of the Bank prior to now.
The reconstitution of the Board followed the voluntary resignation of the former Chairman, Dr. Tunde Ayeni and other Non - Executive Directors of the Bank, namely, Mr. Victor Odozi, Mr. BabajideAgbabiaka, Dr. Jason Fadeyi, Mr. KunleAluko, Mr. Victor Adenigbagbe, Mr. Abdul Bello and HajiyaAmunnaLawan Ali. In the same vein, Mr. Timothy Oguntayo had resigned his position as Group Managing Director / CEO, alongside Mrs. AmakaOnwughalu, Mr. DotunAdeniyi and Mrs. Ibiye Ekong who resigned their positions as DMD, and Executive Directors. All the resignations take immediate effect.
The former leadership of the Bank voluntarily resigned their positions in order to pave the way for a new team to further the new strategic direction of the Bank in the retail and commercial business space, having laid the foundations and set the necessary processes and structures. In this wise, the challenge of accelerating growth in the new strategic direction becomes more urgent and compelling, given the economic challenges in the global and domestic operating environment, and the attendant challenges.
The Bank thanked the former Board led by Dr. Tunde Ayeni, and the former Management team led by Mr. Timothy Oguntayo for their service, sacrifice and dedication to the institution.
The new Chairman of the Bank, Alhaji M.K. Ahmad in a statement earlier today, expressed optimism about the Bank, given its vast potentials and its strategic position in the economy. He stated that the Bank is well positioned to deepen the retail and commercial banking services in the economy, having put in place the critical building blocks to win in this sector. He stated that the immediate priorities of the Board and the new Management team is to quickly begin to leverage the huge investment in the enhanced branch network, technology and alternative channels to improve stakeholder value in a sustainable manner. He assured the shareholders, customers and depositors of the Bank of his commitment to preserve their investments and deposits, while further assuring that the support and backing of the CBN and other relevant stakeholders have been obtained in this respect.
Alhaji Muhammad K. Ahmad, OON, has about 35 years distinguished experience leading and working in various public sector organizations and financial services institutions in Nigeria. He was the pioneer Director General and Chief Executive Officer of the National Pension Commission and also a pioneer staff of the Nigeria Deposit Insurance Corporation and rose to become Director / Head of Department and member of the Interim Management Board.
Mr. Ahmad has served on the boards of various corporate and not-for-profit organisations as well as presidential committees. He chaired the Technical Committee that produced the North East Transformation Strategy (NESTS), a medium term Regional Development Strategy, for the sustainable socio-economic transformation and reconstruction of the Region and currently supervises its implementation. Ahmad is also a member of the Presidential Committee for the North East Intervention (PCNI). Prior to his appointment, he was a Director on the Board of FBN Holdings PLC, where he brought his rich experience in the financial services industry to bear on the institution. He strongly promotes building institutions based on the highest corporate governance and ethical standards and would bring his extensive experience to bear on his role on the board of Skye Bank PLC as Chairman.
Ahmad has a Masters Diploma in Innovation and Strategy from University of Oxford and has also attended courses and programmes in various first-rate business and management schools, including Harvard Business School, IMD and INSEAD. A co-author of the book, “The Extent and Effectiveness of Bank Supervision in Nigeria”, Ahmad is married with children.
The new MD/CEO Mr Adetokunbo Mukhail Abiru, is an alumnus of Harvard Business School (Advanced Management Program) and Lagos Business School (Executive Management Program). He holds a B.Sc (Economics) from Lagos State University and is a Fellow of The Institute of Chartered Accountants of Nigeria (ICAN) and an Honorary Executive Member of The Chartered Institute of Bankers of Nigeria (CIBN).
Tokunbo has had a distinguished career in banking spanning about 26 years, of which his early ten (10) years were spent in the formative years of Guaranty Trust Bank Plc. Thereafter, he spent about Fourteen (14) years with the premier and most valuable banking brand in Nigeria, First Bank of Nigeria Limited, where he functioned as Executive Director, Corporate Banking between 2013 and 2016.
Equally during his banking career, he was at various times between 2013-16 a Non – Executive Director in the following companies: Airtel Mobile Networks Limited; FBN Capital Limited (now FBN Merchant Bank Limited); and FBN Bank Sierra Leone Limited.
Tokunbo was the Honorable Commissioner of Finance for Lagos State Government (2011-2013), the economic capital of Nigeria, during the dynamic and transformational leadership of Governor Babatunde R. Fashola (SAN).
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