Why CBN replaced board, management of Skye Bank

On Monday the management and the
entire board members of Skye Bank
announced that they had “voluntarily”
resigned after failing to steer the bank
out of its liquidity palaver.
In an email to staff, former group
managing director of the bank,
Timothy Oguntayo, said that “counter
forces from within and outside the
bank…made it impossible to achieve
steady progress.” He added that despite
his best effort, he could not lead the
bank into a position of strength.
In another email announcing the
resignation of its management and
board of directors and the appointment
of a replacement by the Central Bank of
Nigeria, the bank said that step was
necessary due to the urgent need for
“new strategic direction …given the
poor performance we recorded in the
2015 financial year end, and the
attendant challenges”.
Similarly, the CBN described the mass
resignation as “proactive” and
“unavoidable”, and said the bank had
persistently failed to “meet minimum
thresholds in critical prudential and
adequacy ratios, which has culminated
in the bank’s permanent presence at
the CBN Lending Window”.
“In particular, Skye Bank’s Liquidity
and Non-performing loan Ratios have
been below and above the required
thresholds, respectively, for quite a
while,” a statement by CBN stated.
While the CBN did not disclose what
the “required threshold” was, an
inquiry by PREMIUM TIMES revealed
the apex bank asked the bank’s
management to raise a minimum of
N50 billion.
Our investigation showed that efforts
made by the bank to raise the fund
proved abortive because its capital
base had been decimated by inside
credit, which are non-performing.
Having tried to raise the money locally
and failed, the bank’s management
tried abroad and were able to convince
a Moroccan bank and a South African
bank to invest in it.
Things seemed to have normalised at start but the
investors lost interest because they were
unimpressed by the due diligence they
commissioned on the bank and its chairman, Tunde
Ayeni.
According to our findings, the investors started
dilly-dallying but did not tell the management of
Skye Bank they were no longer interested.
That was the last straw for the management. The
CBN moved in quickly to prevent the bank from
collapsing and to secure depositors’ fund, our
sources said.
In a letter signed by the director of banking
supervision of the CBN, Benjamin Fakunle, on
January 22, 2015, the apex bank extended the
deadline for Skye Bank to shore-up its capital base
to December 31, 2016.
The Letter titled: Re: Insider Credit, and addressed to
the banks managing director reads:
“We refer to your letter dated December 10, 2015,
and our exchange of correspondence on the above
subject and write to inform you that the Central
Bank of Nigeria has granted an extension of time till
December 31,2016 to enable you bring your insider
related credits within the stipulated regulatory
maximum of 10% of your paid up capital per
director including his/her related parties and 60%
paid up capital for total related credit in line with
circular BSD/9?2004 on large exposure and connected
lending.”
“You are required to provide quarterly reports/
updates on progress made,” the letter concluded.
According to a list of 100 chronic debtors out of
12,744 released by the Asset Management
Corporation of Nigeria, AMCON, Skye Bank is
individually owed a total of N16.46 billion and
jointly owed N104.80 billion with four other banks-
Zenith Bank, Intercontinental Bank, First bank of
Nigeria and Union Bank.