The Central Bank of Nigeria (CBN) yesterday dissolved the board and management of Skye Bank Plc, after it deemed them unfit to continue to run the bank appointing Alhaji Muktar Ahmad and Tokunbo Abiru as its Chairman and Managing Director respectively.
Asides the chairman and MD, the apex bank also appointed two executive directors and five non executive directors to replace the sacked board members which it said had resigned voluntarily.
Skye Bank which had early last month sacked almost 200 of its workforce has on its books non performing loans of over N700 billion owning to its exposure to the oil and gas sector. Addressing journalists yesterday, CBN Governor, Godwin Emefiele said the bank’s key ratios had dropped to a level that the CBN had to intervene.
Emefiele note that the bank’s liquidity situation was such that it has a permanent presence at the CBN discount window, where banks resort to when they run out of cash. Stressing that the bank is not in distress, he said key ratios such as non performing loans, capital adequacy ratio and liquidity situation of the bank had warranted the step taken by the apex bank.
“We have seen since around late 2013 into 2014 and 2015 is that these prudential and adequacy ratios have been weakening and we thought it is not right for us for allow these to weaken to the point where it becomes irreversible situation and that is why we decided to take this action.
“It has nothing to do with being distressed. What we are trying to say is that we don’t want the prudential ratios of this bank to get to a situation where depositors funds get into risk and that is why this is happening.
“These proactive moves have become unavoidable in view of the persistent failure of Skye Bank PLC to meet minimum thresholds in critical prudential and adequacy ratios, which has culminated in the bank’s permanent presence at the CBN Lending Window. In particular, Skye Bank’s Liquidity and Non-performing loan Ratios have been below and above the required thresholds, respectively, for quite a while.
“To correct the anomalies in the bank, the CBN had several meetings with the management and board of Skye bank as part of our strategy of close engagement whenever a bank’s financial or governance situation poses potential threats to the overall stability of our financial system. Despite the expectation of relevant regulators, market watchers, financial analysts and interested stakeholders that Skye Bank should be doing much better than it is right now, we have seen about the opposite in reality.
“Given the aforementioned issues and the fact that Skye bank is a Domestic Systematically Important Bank (SIB) with significant interconnectedness, the CBN would be failing in its duties if it does not take immediate action to nip the steadily declining health of the bank in the bud and correct the situation. In view of the long grace period allowed the bank to correct the situation, we came to the conclusion that, although the existing board had done its best to steer the ship it had come to a realization that it would
be unable to bring the bank out of its present precarious situation. Fortunately, and in the overall interest of the bank, the Chairman and some board members have decided to resign their appointments from the bank.”