CBN revokes Skye Bank’s licence as Polaris Bank takes over

*Assumes assets and liabilities *NDIC sells Polaris to AMCON *AMCON to inject N786bn into Polaris Bank The Central Bank of Nigeria (CBN) Friday revoked the license of Skye Bank, and transferred its assets and liabilities to a newly licensed bridge bank called Polaris Bank. Meanwhile, the Nigeria Deposit Insurance Corporation (NDIC) has sold Polaris Bank to the Asset Management Corporation of Nigeria (AMCON) with the mandate to stabilise the bank as well as return it to profitability for the purpose of selling it to interested Investors. In this regard AMCON will inject N786 billion into Polarise Bank to bring it’s net value to zero. CBN Governor, Mr. Godwin Emefiele and NDIC Managing Director, Alhaji Umaru Ibrahim disclosed this at a joint press conference in Lagos Friday. Emefiele said while the purpose of the CBN’s intervention in Skye Bank on July 4th 2016 has been achieved the decision to revoke the license of Skye Bank was due to failure of its shareholders to recapitalise the bank. He said: “The focus of the action then was to save depositors’ funds and to ensure that the bank continued as a going concern, 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. These objectives have been fully achieved and the bank has been able to meet customer obligations, having curtailed the liquidity hemorrhage and restored depositor confidence. Indeed, the bank’s performance has improved considerably compared to the pre-July 2016 era. “The result of our examinations and forensic audit of the bank has, however, have revealed that the Skye bank requires urgent recapitalization as it can no longer continue to live on borrowed times with indefinite liquidity support from the CBN. The shareholders of the bank have been unable to recapitalize it. “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. The strategy is for the Asset Management Company of Nigeria (AMCON) to capitalize the Bridge Bank and begin the process of sourcing investors to buy out AMCON. By this decision, the licence of the defunct Skye Bank is hereby revoked. “We wish to assure all depositors that under this arrangement, their deposits shall remain safe and that normal banking services shall continue in the new bank on Monday, 24th September, 2018, to enable customers to transact their businesses seamlessly. “Thus, all customers of Skye Bank shall be automatic customers of the new bank and their accounts and records duly purchased by Polaris Bank. “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. “We wish to assure the general public that the Nigerian banking industry remains safe and resilient and that the CBN will continue to live up to its responsibilities of promoting stability in the banking and financial system.” Emefiele further disclosed that the shares of Skye Bank would be suspended on the Nigeria Stock Exchange henceforth till further notice. Also speaking, MD/CEO of NDIC, Alhaji Umaru Ibrahim said that AMCON will inject N786 billion facility into Polaris Bank adding that the fund is a long term loan granted at single digit interest rate. He said: “In continuation of the Central Bank of Nigeria intervention in the distressed Skye Bank Plc which started on the 4th of July 2016 and which was aimed at protecting depositors of that bank, the NDIC in exercise of its statutory powers under the NDIC Act 2006 and in consultation with the central bank has 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. “Consequently, Polaris Bank Limited has been issued operating license by the CBN and shall commence banking business from today, Friday, 21st September.” “The operating license of Skye Bank has been revoked by the Governor of the Central Bank and the NDIC has commenced its liquidation. The capitalisation of Polaris Bank Limited is being done by the Assets Management Corporation of Nigeria through the injection of about N786 billion to return the bank to soundness and profitability so as to enable its subsequent sale to credible and financially sound third-party acquirers. “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 their banking transaction. “Furthermore, adoption of the bridged bank model for resolution of Skye Bank Plc guarantees that most of the employees of that bank would not loose their jobs and they would continue their employment with Polaris bank limited under a fresh contract of employment. “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 hereby assures depositors and customers of the defunked Skye bank that their deposits are safe and hereby encourages all of them to continue to transact their businesses with Polaris bank.”]]>