CBN removes Skye Bank’s chairman, MD, others •Over poor liquidity and high non-performing loans

Godwin Emefiele CBN governor

The Central Bank of Nigeria (CBN), on Monday, sacked the chairman of the board of Skye Bank Plc, the Managing Director, Deputy Managing Director, all non-executive directors as well as the two longest serving executive directors of the bank.godwin-emefiele-new-cbn-gov

The apex bank, which cited weakening capital adequacy ratio, low liquidity ratio and rising Non Performing Loans, however, gave the affected people a soft landing by allowing them to resign voluntarily.

It announced Alhaji Mukthar K. Ahmad and Mr. Adetokunbo Abiru as the new Chairman and Managing Director respectively.

In reaction to the development, the bank’s stock lost 9.2 per cent, shedding 10kobo, closing at N9.52 from the N9.62, with which it opened.

The CBN Governor, Godwin Emefiele, while addressing a press conference in Lagos, on Monday, said “In particular, Skye Bank’s liquidity and non-performing ratios have been below and above threshold respectively.”

Skye Bank is said to have an estimated non performing loan portfolio of N700 billion, much of which is due to overexposure in the oil and gas sector.

Meanwhile, the Nigeria Deposit Insurance Corporation (NDIC), had last week in a report, said that Deposit Money Banks’ NPLs reached 4.87 per cent in 2015, a situation currently raising concerns about quality of assets in the industry, though the corporation said the rate was still within the regulatory threshold of 5 per cent.

Emefiele said though depositors’ money remained intact and unaffected, the proactive moves of the CBN became unavoidable because of the persistent failure of Skye Bank to meet minimum thresholds in critical prudential and adequacy ratios.

The deteriorating ratios he said resulted in the bank’s permanent presence at the CBN Lending Window.

“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,” the Governor stated.

“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,” the CBN also said in a statement.

Emefiele stressed that Skye Bank was not in distress and remained a healthy bank.

“The CBN hereby assures depositors, shareholders and all relevant stakeholders that there is no reason for concern or panic as we seek their continued cooperation at this time. It is our expectation that the shareholders and remaining Executive Directors will work seamlessly with the new team to ensure that the fortunes of the bank are restored in the shortest possible time,” he stated.

Speaking in the same vein, the new chairman, Ahmad, in a statement issued shortly after taking over, expressed optimism about the prospects of the bank, given its vast potential 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 stressed that the immediate priorities of the board and the new management team would be 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.

Meanwhile, a source within the bank told the Nigerian Tribune that the first sign that trouble was brewing in the bank on Monday came to the fore a little after 12noon when a memo was circulated about the resignation of the former Managing Director of the bank, Mr Timothy Oguntayo.

In the email, Oguntayo stated that despite his best effort to turn around the fortune of the bank, “counter forces from within and outside the bank…made it impossible to achieve steady progress.

“The last two years of my stewardship as the GMD/CEO, has been very eventful and challenging,” he wrote. “I have put all that I have into turning the fortune of the bank around, working with each and every one of you. However, the results have not been commensurate with the efforts. There have been counter forces from within and outside the bank that made it impossible to achieve steady progress.”

He added, “It is in this vein that I have offered to resign my appointment as the GMD/CEO with immediate effect. I enjoin you all to cooperate with the new management that would be announced soon,” the memo that was sent at 12:11 P.M read.

The new chairman, Alhaji  Muktar. K. Ahmad, is a seasoned public sector executive with over 35 years of distinguished experience spanning the public sector and the financial services industry.

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.

The new MD/CEO Mr Adetokunbo Mukhail Abiru, is an alumnus of Harvard Business School (Advanced Management Program) and Lagos Business School (Senior 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 Senior 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.

Skye Bank resulted from the merging of five banks, Prudent, Cooperative Bank, Eko International Bank, Bond bank and reliance Bank. It acquired Mainstreet Bank in 2014.