Financial sector regulatory authorities decided to adopt the bridge bank option in resolving Skye Bank crisis to protect depositors’ funds and employees in the now defunct bank.
Central Bank of Nigeria (CBN) on Friday approved the revocation of the operating license of Skye Bank, replacing it with Polaris Bank Limited, to ensure normal banking transactions are not disrupted.
The new bank, which is to commence business immediately, will take over the assets and liabilities of the now rested Skye Bank and continue to transact businesses from where its predecessor stopped.
To make certain that the interest of former customers and depositors in Skye Bank were fully protected, financial sector insurer, Nigerian Deposit Insurance Corporation (NDIC), said the successor bank, Polaris, and the customers of Skye Bank remain insured under the NDIC Act.
NDIC spokesperson, Mr Mohammed Ibrahim, said in a statement the adoption of the bridge bank model was equally to guarantee that most of Skye Bank employees don’t lose their jobs.
According to Ibrahim, the former Skye Bank workers will continue their employment with Polaris Bank Limited under fresh contracts and employment terms and conditions.
“NDIC, as Deposit Insurer, acted to ensure the continued safety of depositors’ funds in furtherance of the regulatory authorities resolved to proactively manage potential threats to financial system stability,” Ibrahim said.
In announcing the revocation of Skye Bank license on Friday, CBN governor, Mr Godwin Emefiele, said the board and management shall be retained given their good performance.
Prior to the decision to revoke Skye Bank license, CBN governor said since 2016 the bank had been under the regulatory radar of the apex bank after it discovered some “unacceptable corporate governance lapses as well as its persistent failure to meet minimum thresholds in critical prudential and adequacy ratios”.
The shortcomings of the bank, CBN governor said, culminated in the bank’s permanent presence at CBN lending window.
On July 4, 2016, Emefiele said CBN took a regulatory action which led to the resignation of the chairman of Skye Bank, Mr Tunde Ayeni, along with Group Managing Director/ Chief Executive Officer, Timothy Oguntayo, and all Non-Executive Directors on the Board and the two longest-serving Executive Directors on the management team.
To further strengthen investors and depositors’ confidence in the new banking arrangement, Mr Emefiele said Assets Management Corporation of Nigeria (AMCON) will immediately commence the process of capitalization of Polaris Bank Limited.
As a first step, he said the bridge bank will receive fresh injection of about N786 billion to return it to soundness and profitability to enable its subsequent sale to credible and financially sound third party acquirers.