Born in 2006 from a union of four banks, the entity, Skye Bank Plc, has been through several transfusions and finally transformed into Polaris Bank on Friday, September 21, 2018 after being on life support for more than two years. Bukola Idowu and Shola Bello (Lagos) write on the activities that led to its takeover.
The Central Bank of Nigeria (CBN), on Friday evening, had revoked the license of Skye Bank and the Nigeria Deposit Insurance Corporation (NDIC) said it has commenced the process of liquidating it. In its place, the CBN had issued an operating license to Polaris Bank Limited, which would, from September 21, 2018 take over the assets, liabilities, staff and management of the distressed bank.
The story of Skye Bank can be traced back to 1989 when it was Prudent Bank Plc. In 1990, the bank was issued a license as merchant bank and it rebranded as Prudent Merchant Bank Limited. By 2006, in the recapitalisation era of the former CBN governor, Chukwuma Soludo, when the capital base of banks was increased to N25 billion, it merged with four other banks to form Skye Bank Plc.
The union consisted of EIB International Bank Plc, Bond Bank Limited, Reliance Bank Limited, Co-operative Bank Plc and Prudent Bank. Having adjusted to the union, the bank thrived and even scored a first.
In January 2011, the bank introduced a Naira-denominated MasterCard debit card, called “MasterCard Verve”, the first of its kind in Nigeria. It swept the nation with its off-site Automated Teller Machines before the policy, which stopped off-site ATM operations by banks. Following the nationalisation of some banks in 2013, Skye Bank bidded for one of the banks taken over by the Assets Management Corporation of Nigeria (AMCON). It succeeded in buying Mainstreet Bank for N126 billion, beating Fidelity Bank to it as part of its strategic growth move. This move, industry watchers say, has been one of the mistakes of the bank as they said the bank at that time, did not have enough capacity to take over another bank. This may not be far from the truth as two years into the acquisition, the bank was already having liquidity issues such that it was a resident of the CBN facility window and had acquired substantive level of bad loans arising from insider credits. This prompted the apex bank to take drastic move as it was deemed a systematically important bank.
On July 4, 2016, the CBN decided to change the board of the bank but in a preemptive move, the managing director, Timoty Oguntayo, along with the executive directors of the bank resigned from their position. To enable the bank run efficiently, the CBN had pumped in N350 billion into the bank until the shareholders were able to build up the share capital of the bank. However, two years down the line, the shareholders had not been able to raise the required capital and the bank remained a regular face at the CBN facility. Consequently, the CBN had, on Friday, taken the step to take over the bank and hand over its ownership to AMCON. This means that the over 450,000 diverse shareholders of the bank had lost out on their investment. Despite being one of the best performing stock on the Nigerian Stock Exchange (NSE) in terms of share price, its fate could not be changed. Read more