Skye Bank affirms CBN’s N101b recapitalisation

The much-anticipated lifeline for troubled Skye Bank Plc has finally arrived, with a recapitalization to the tune of over N100 billion.

A top and reliable source in the bank confirmed to The Guardian yesterday, that the funding was about $315 million and worth more than N101 billion from the apex bank, to smoothen their operations again.

The newly appointed Managing Director and Chief Executive Officer, Tokunbo Abiru, who affirmed the receipt of the funds, said the injection came on the heels of the sacking of the lender’s top management this month for failing to meet minimum capital requirements.

The newly appointed Managing Director and Chief Executive Officer, Tokunbo Abiru, said the bank recorded a pre-tax loss due to oil-related bad loans and withdrawals of public sector deposits amid a government anti-corruption drive.

The development hit the bank hard and led to CBN’s intervention after depositors embarked on panic withdrawals to avert wider troubles within the banking sector.

According to a report, after the apex bank installed a new management team, it also left a staff that has been working for two weeks at the headquarters in Lagos to support the lender.

The bank would conduct an audit to see “what we inherited” and establish how much liquidity was needed, Abiru said.

He said he hoped to have an overview by December after which they could focus on being a “frontline retail” bank, as he hinted that some branches would be closed to bring down costs, pending approval from the central bank.

Skye’s non-performing loans amounted to 13 per cent of total loans at the end of last year, well above the central bank target of less than five per cent, the new boss said.

“The losses largely came from issues relating to the cost-income ratio” which was “above the industry standard”, plus “the liquidity challenge as well and asset quality issues, and the resulting effect of all that”, he said.

“There was a very high dependence on public sector debt deposits,” said Abiru, referring to a government order last year to have all official bodies move funds from lenders to a central bank account as part of an anti-graft drive.

“The bank was severely hit by that,” he said, declining to give an outlook for this year.

Additionally, half of Skye’s loan book was in foreign currency from the oil industry, which has been hit by low crude prices.

The bank’s capital adequacy ratio was 10.4 per cent last year, compared with an industry standard of 16 per cent, and its cost to income ratio was “close to” 103 per cent, rather than the standard of about 65 percent, he said.

Nigeria’s central bank governor Godwin Emefiele, is urging people not to panic about the banking system, saying he is on top of any trouble resulting from the economic crisis.