MD Skye bank
Barely a few weeks after the Board of Directors of Skye Bank Plc notified the Nigerian Stock Exchange (NSE) of the voluntary resignation of four of its Executive Directors, the financial institution is back in the news for another wrong reason.
This time round, customers of the bank are faced with the challenge of successfully carrying out transactions without hitches. There are indications that it now takes more than the normal 36-hour authorised duration period for a cheque coming from the bank to be cleared when lodged in another bank.
A customer of the bank who gave his name as Adegbola Adefaranti told our correspondent in Lagos that it is becoming very difficult to carry-out transactions with the bank’s cheques in recent times. He cited an example of how he issued the bank’s cheque to a client who lodged same into his GTBank and it was rejected by the receiving bank.
According to Adefaranti, he had to personally visit the bank and put pressure on his account officer to allow the transaction, which was for about N150 million, sail through after several efforts.
Another customer Mrs. Adeola Opeyemi, a trader in Lagos Island, narrated her recent experience with the bank, expressing concern about the health of the bank. According to her, just last week she visited the Broad Street branch of the bank to carry out a transaction but she was disappointed as the bank could not honour a cheque of N25 million.They claimed that there was no sufficient funds to do so.
According to her, it took three days for the bank to complete the transaction, offering various reasons for the delay.
Meanwhile, our correspondents’ investigations revealed that many customers of the bank now find it difficult to clear their cheques as cases of insufficient funds to meet customers’ needs have become the order of the day.
The case is even further complicated as it was also discovered that Automatic Teller Machines (ATM) of some other banks do not honour transactions of the bank.
Shola Falomo, a student of the Lagos State University who shared her experience with our reporter said she discovered that many banks now reject transactions on Skye Bank’s ATM. She said she has consequently resolved to make it a point of duty to locate a Skye Bank branch to make withdrawals.
Asked why she still continues to transact with the bank, Falomo said her father who is a civil servant prefers to send her money using Skye Bank. According to her, apart from her parents sending her money through that account, she does not transact any other business using the bank.
But the Central Bank of Nigeria (CBN) has reassured the public of the safety of their funds in Skye Bank. The apex bank described claims by customers of the bank who say they find it difficult to successfully transact business with the bank as malicious.
Part of the statement reads, “The attention of the Central Bank of Nigeria (CBN) has been drawn to the content of a malicious message urging customers of Skye Bank to withdraw their deposits or transfer them to other banks based on the vile allegation that Skye Bank has been liquidated by the CBN.”
“The CBN wishes to state, and emphatically so, that it has not liquidated Skye Bank or any other Deposit Money Bank for that matter.”
“The Bank also wishes to reiterate its earlier assurance that Skye Bank is not in distress and remains a healthy bank in the Nigerian banking system. Indeed, the health of the Nigerian banking system remains strong, all banks in Nigeria are safe and depositors have no cause to fear over their deposits.”
The CBN, however, admitted that the bank has some internal crisis but assured that it has taken proactive measures to curb same.
“While it will be recalled that Skye Bank had corporate governance challenges, the CBN has since taken proactive steps to resolve the issues identified. Indeed, the CBN is satisfied with the efforts of the new management to reposition Skye Bank for effective service delivery.”
The apex regulator thus advised customers of Skye Bank and other stakeholders to disregard any message purporting a liquidation of the bank.
Huge Debt Burden
The crisis in the bank has been blamed on insider related non-performing debts. The bank in a recent publication revealed that eleven (11) individuals and corporate bodies with one form or relation with the bank’s directors or otherwise are owing it over N148 billion. Some of such debts date back to 2008.
Interestingly, each of these debtors were able to access between N50million and N1billion even as the ordinary Nigerian entrepreneur continue to find it difficult to access loans to transact legitimate business deals.
Latest Developments
Indications that a fresh crisis is brewing in Skye Bank emerged recently when the bank’s officials wrote to the Nigerian Stock Exchange (NSE) announcing the resignation of four of its executive directors.
The affected directors are Mr. Idris Yakubu, Mrs. Markie Idowu, Mrs. Abimbola Izu and Mr. Bayo Sanni.
According to the notice which was signed by the Company Secretary/General Counsel, Babatunde Osibodu, the said directors had served in executive management capacity for nearly two years and had been part of the new board of the bank following the intervention of the Central Bank of Nigeria on 4 July, 2016.
The statement further expressed the appreciation of Mr. Tokunbo Abiru, Skye Bank’s CEO who thanked the affected executive directors for their service to the bank, while noting that they had contributed immensely to the successful change of baton which took place last year.
Genesis
The problem in Skye Bank became public in July 2016 when the CBN took over the board and management of the bank after the lender failed to meet the regulator’s minimum key liquidity and capital adequacy ratios.
The CBN Governor, Mr. Godwin Emefiele, while addressing a press conference at the Lagos Office of the CBN said the apex bank appointed a new board and management for the bank following the resignation of the Chairman, Chief Tunde Ayeni, and Management Director/Chief Executive Officer, Mr. Timothy Oguntayo.
Emefiele revealed then that the sacked board and management had consistently failed to turn the fortunes of the bank around despite consistent warnings by the CBN.
The governor also said the CBN had removed and replaced all the non-executive directors and two of the longest-serving directors.
Analysts’ View
According to financial analysis carried out on the bank using the 2015 full year result it is obvious that the bank’s ratios were well below regulatory requirements. The non-performing loan (NPL) ratio was at about 13 per cent (regulatory maximum: 5 per cent), capital adequacy at about12 per cent (regulatory minimum: 15 per cent), loan-to-deposit ratio at about 98 per cent, and liquidity ratio at about 22 per cent (regulatory minimum: 30 per cent).
Financial analysts are of the view that in order to improve liquidity of Skye Bank, the CBN had injected about N100 billion (one-year tenor) into the bank for the new management to effectively perform.
Analysts at CSL Stockbrokers Limited put it this way: “We expect that an expansion of risk weighted assets on the back of the depreciation of the naira may have put further pressure on CAR which may have declined significantly below the 12 per cent reported for full year 2015.”
They further revealed that: “From our discussion with a top management official, we understand that management had communicated the intention to divest of its foreign subsidiaries since May and the process is nearing completion. The bank is currently auditing half year numbers which will give a more current assessment of the bank’s capital ratio.”
In another development, the bank late last year said it is seeking to dispose of majority stakes in its businesses in Gambia, Guinea and Sierra Leone in a bid to ease pressure on capital.
With this move, the bank seeks to relinquish its international licence and become a National Bank.
According to CSL Stockbrokers, analysts’ move to divest from its foreign subsidiary is a practical option to begin with.
