Sequel to the announcement of management shift of Skye Bank Plc by the Central Bank of Nigeria (CBN), the bank’s stock has plunged deeply by 43 per cent.
On Friday, Skye Bank stocks slid for a seventh day, declining 1.6 per cent to 60 kobo, heading closer to the 50 kobo limit that no Nigerian equity can trade below.
On July 4, CBN had announced that it replaced Skye’s Chief Executive Officer, Chairman and 10 other Directors, saying the steps were necessary after the lender breached requirements on liquidity and non-performing loans.
In a quick move to allay fears, the central bank releadesd another statement on July 6, announcing Skye Bank and the rest of the industry.
Despite these, investors have continued to dump almost all banking shares on concerns of contagion, as predicted by an analyst who spoke with the Nigerian Tribune.
“The negative news at present is that of Skye bank. Not only banking stock would be negatively affected by the Skye bank news as others would follow suite. It definitely will impact on the market because it’s a bandwagon effect. When it affects banking stocks others are affected as well. Investors will withdraw to an extent,” Rotimi Fakayejo had said.
The new leadership of the bank, recetly visited the Nigerian Stock Exchange (NSE) at the beginning of their tenure, paying a courtesy call to seek cooperation and fair trade at such turbulent time in the bank’s history.
The bank has continued to urge shareholders to keep calm, promising that deposits with the bank remain safe. Group Managing Director/Chief Executive Officer of the bank, Mr Tokunbo Abiru had said the management team and the board would work to achieve value enhancement for shareholders, customers and other stakeholders by bringing the cost-income ratio to acceptable levels, improve the risk assets quality and work towards increasing the liquidity and capital adequacy of the bank.
Despite the bad weather of stock trading, Fitch ratings and the CBN had corroborated Skye Bank’s stance, insisting that the bank remains a viable venture, with over N127 billion in revenue.
Analyst however remained optimistic that there will be a turn around of Skye Banks stock, once investors fully understand the situation.
“I don’t see why Skye Bank should be trading at these distressed levels,” said Pabina Yinkere, an equity analyst at Vetiva Capital Management Ltd. “When investors come to realise that the bank is not as bad as the reaction that followed the central bank action, the stock will regain attraction.’’