The Central Bank of Nigeria (CBN) on Friday announced the takeover of Skye Bank by a bridge bank, Polaris.
Here are 10 basic things to know about the entire process and future expectations:
1. Skye bank’s operating licence has been withdrawn
The Central Bank of Nigeria has withdrawn the licence of the bank, effective Friday.
2. CBN, NDIC have established bridge bank – Polaris
The CBN, in consultation with the Nigerian Deposit Insurance
Corporation (NDIC), has established a bridge bank that will survive the
bank known as Polaris. A bridge bank is a bank authorised to hold the
asset and liabilities of another bank, specifically an insolvent bank.
3. Polaris takes over Skye Bank
Effective Monday, all asset and liabilities of Skye Bank have been taken over by the new bridge bank, Polaris.
4. What happened to Skye Bank?
On the 4th of July 2016, the CBN took a regulatory action on Skye
Bank Nigeria PLC, leading to the resignation of the Chairman, 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.
5. Why ‘regulatory action’?
The focus of CBN’s regulatory 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 the apex bank’s intention was also
to stem the imminent job losses to staff if a liquidation option had
been adopted.
6. What happened afterwards?
Although CBN said the bank had improved after the ‘regulatory
action’, the result of its forensic audit of the bank 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.
7. What’s the new strategy about?
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.
8. What happens to depositor’s money?
By the arrangement, the CBN said all depositors’ 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.
9. New bank, new name
By Monday, customers of Skye Bank shall be automatic customers of
the new bank and their accounts and records duly purchased by Polaris
Bank.
10. What about management and staff of Skye bank?
According to the CBN, 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.
Source: PREMIUM Times