- NDIC assures depositors
- AMCON injects N786bn into Polaris Bank
BY CHINYERE OBIORA, LAGOS – The Central Bank of Nigeria (CBN) on Friday revoked the operating license of Skye Bank with its assets and liabilities moved over to Polaris Bank as the newly licensed bridge bank.
This is as the Nigeria Deposit Insurance Corporation (NDIC) has concluded Polaris Bank’s sales to the Asset Management Corporation of Nigeria (AMCON) with the mandate to stabilise and make it attractive to investors.
With the development, AMCON’s injection of about N786 billion will bring the bank’s net value to zero and put it on the path of profitability for the planned sale commencing on Monday, September 24, 2018.
Speaking at a joint media briefing in Lagos on Friday, CBN Governor, Mr. Godwin Emefiele and NDIC Managing Director, Alhaji Umaru Ibrahim said the decision is meant to safeguard depositors’ funds and preserve the bank as a growing concern.
According to Emefiele, though the CBN achieved its goal of intervening in Skye Bank on July 4, 2016, it had to revoke the bank’s license because the shareholders refused to recapitalise it as agreed.
Explaining that the action aims at saving depositors’ funds and ensuring the bank carries on as a going concern, the CBN boss said; “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.”
He said with the set objectives fully achieved, the bank has been able to meet customer obligations, “having curtailed the liquidity haemorrhage and restored depositor confidence”, adding that the bank’s performance has improved significantly compared to the pre-July 2016 era.
Mr Emefiele, who said the strategy is for AMCON to capitalize the Bridge Bank and begin the process of sourcing investors for a buy-out, disclosed that; “The result of our examinations and forensic audit of the bank has, however, have 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.
“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.
He however assured all depositors that under the current arrangement, their deposits remain safe with normal banking services continuing in the new bank on Monday, 24th September, 2018, to enable customers to transact their businesses seamlessly.
“All customers of Skye Bank shall be automatic customers of the new bank and their accounts and records duly purchased by Polaris Bank”, the CBN governor said, stressing that; “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.
Emefiele said for now, the Skye Bank’s shares would be suspended on the Nigeria Stock Exchange (NSE) till further notice, even as he maintained that the nation’s banking sector remains safe and resilient.
He also assured that the apex bank would not renege on its statutory duties of promoting stability in Nigeria’s banking and financial system in the overall interest of Nigeria’s sustainable socio-economic growth and development.
In his remarks, Managing Director and Chief Executive of NDIC, Umaru Ibrahim said the N786 billion facility injected into Polaris Bank is a long term loan granted at single digit interest rate.
Ibrahim said the Corporation, in line with its statutory powers under the NDIC Act 2006 and in consultation with CBN, 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.
He said; “Consequently, Polaris Bank Limited has been issued operating license by the CBN and shall commence banking business from today, Friday, 21st September”, adding that; “The NDIC carried out the bridged bank option so as to resolve the Skye Bank in order to make certain that its depositors are protected and the deposits with the Polaris Bank Limited is insured under the NDIC Act and the customers of Skye bank Plc can continue to transact business with Polaris Bank limited thereby ensuring non distribution of thier banking transaction.”
Ibrahim stated that; “The NDIC as a deposit insurer acted to ensure the continuous safety of depositors funds in furtherance of the regulatory authorities resolve to proactively manage the potential threat to financial stability.”
The NDIC boss urged all defunct Skye bank’s depositors and customers to continue their business transactions with Polaris bank, assuring that their deposits are safe in the bridge bank.