FINALLY, when the skies fell on Skye Bank there was hardly a whimper of surprise. Most stakeholders in the banking industry had seen it coming for long. If there is any surprise at all, it is the length of time it had taken the regulators to wield the big axe on the sick bank. Skye Bank was admitted into the sick bay of the Central Bank of Nigeria, CBN, in 2016 when it showed persistent liquidity challenges and other infirmities arising from not meeting obvious minimum banking thresholds. The bank was constantly sighted at the CBN’s lending window seeking for assistance which was a clear indication that something was horrible
When the regulators intervened, the Chairman and some key members of the Board of Directors of the bank were booted out and replaced with fresh appointees who were given a fresh mandate to recapitalise and return the bank to the path of progress. To assist the new management of the bank then, the CBN ploughed in some N350 billion to shore up its liquidity situation. For two years the bank tottered until last week when the regulators decided to pull out the life support and put an end to Skye Bank’s unending suffering.
The price was, however, stiff for the national treasury as some N700 billion had to shelled out this time as loans at a single digit interest rate to Polaris Bank, the bridge bank that took over the assets (if any) and liabilities of the expired Skye Bank. The rational for this action is simply because the alternative price would have been stiffer. There would have been a run on the bank with the consequent systemic effect on the banking industry and the larger Nigerian economy.
For those acquainted with the pedigree of Skye Bank it is just a wonder that it should falter and fail. Formed during the heady days of recapitalisation in 2006 when small banks with inadequate capital were encouraged to pool their resources together to reach the magic figure of N25 billion, Skye Bank came into being from the amalgamation of five banks: EIB International Bank Plc, Bond Bank Ltd, Reliance Bank Ltd, Cooperative Bank Ltd and Prudent Bank. The leadership of Skye Bank was rated highly as composed of seasoned bankers and business technocrats.
They did well initially with branches spread not only in Nigeria but also in many African countries. They were even said to be pacesetters by being the first to introduce a Naira-denominated debit Mastercard, the first of its kind in Nigeria. Then matters unravelled as greed sets in and the bank went down the slippery hill path until the regulators intervention. It was only when the regulators’ newly appointed board led by the highly respected M K Ahmed, a former Director-General of National Pension Commission, started functioning that the rot in Skye Bank became public knowledge. After a forensic investigation, it was found that insider trading was essentially the bane of the bank. It was clear that the board that was touted to be composed of seasoned bankers and businessmen was actually a motley crowd of Ali Baba and whatever number of thieves helping themselves to depositors’ monies in such a grand scale that the bank’s existence was in jeopardy.
One individual who was said to be the Chairman of the bank cornered loans to the tune of N89.4b taken to acquire Ibadan and Yola Electricity Distribution Companies, as well as NITEL/Mtel, that were being sold out at the time. Another N29b was found in a suspense account that was traced to him, while $6.8m found its way into his law firm’s account and utilised for his personal use. A father of one of the directors took away N191b. And that infamous NNPC looter took away another N110b ostensibly to invest in Oil and Gas and also to buy the Abuja Electricity Distribution Company.