CBN, Skye Bank, bank customers and way forward – Part 1
The Central Bank of Nigeria (CBN), two weeks ago, saved the embattled Nigerian economy from deepening its slide from recession into depression. That was the major outcome of CBN’s intervention in Skye Bank Plc whose Board and Executive Management were said to have voluntarily resigned and new ones appointed by the apex regulator. According to the CBN, Skye Bank failed to operate within the minimum required regulatory prudential ratios of liquidity and capital adequacy. These critical problems resulted in the bank’s frequency visits to the regulator’s lending window for credit facilities. The huge amount of non-performing credit facilities, most of which are reported to be insider related, served as the principal catalyst for Skye Bank’s problems.
With the CBN’s intervention Skye Bank has been redeemed from getting into distress (since the CBN said it is not distressed) and subsequent liquidation. Thus, Skye Bank has a new opportunity to re-invent itself in order to remain truly alive.
Beyond helping Skye Bank remain alive, CBN has saved depositors in the bank from another misfortune of losing their hard-earned money and the troubles that go with beginning financial accumulation life afresh. The customers’ families and businesses are no less gainers from the redeeming action of the Bank. The employees of Skye Bank are also great beneficiaries as they would have become candidates for unemployment, in an already saturated market.
All persons providing services to Skye Bank who would have lost such opportunity if the bank had gone under should be on their knees thanking God for salvation via CBN. No doubt, the Minister of Labour and Productivity, Senator Emeka Ngige will have cause to sleep with his two eyes closed, that is, without worrying about a sizeable number of new entrants into the unemployment market. President Muhammadu Buhari and the APC-led government should be happy that the cod upon which Skye Bank was hanging on in order not to slip into distress did not snap before the CBN reached out and pulled it to safety.
The list of beneficiaries from the action of CBN on Skye Bank could go on and on; and that partly constitutes some of the pertinent reasons the CBN should be commended for rising to the challenge of saving the bank. CBN in addition assured all Nigerians and indeed, the entire world, that all is well with Nigeria’s banking industry as no bank (including Skye) is distressed. The regulator crowned everything up by directing the banking public to go about their legitimate banking businesses and transactions without any fear. Counting on these assurances and knowing that the CBN has or is in a position to have enough relevant information to justify its position, it is advisable that bank customers and all consumers of banking services, should heed the call by CBN. The flip-side though is that, the Bank, its Board and principal officers have offered themselves to be held responsible if things turn otherwise, which it is hoped will not.
Notwithstanding the foregoing, the question that may need to be answered is whether what has happened in Skye Bank could not have been prevented? This is important because this country has had, in the recent past, experiences similar to that of Skye Bank. Were there no lessons learnt that would have aided prevention of a re-occurrence? Beyond that, CBN pre-screens board members and top management staff of banks and other financial institutions within its jurisdiction before their appointment and also regulates and supervises their operations and activities. How is it that individuals the regulator considered “fit and proper” for Board and management appointments in Skye Bank were unable to play their roles creditably and satisfactorily thus, resulting in the mess described by CBN? Furthermore, how come the unethical and unprofessional practices of some of the Board and Management that endangered the safety, soundness, stability and sustainability of the bank were undetected despite the various examination and supervision exercises conducted by CBN and perhaps, the Nigerian Deposit Insurance Corporation (NDIC) on Skye Bank? If they were detected, why were they not corrected or remedied and what level of sanctions did CBN impose? By extension, how long ago did the problem start and when did it come to the attention of regulators and supervisors of the bank?
And many questions can be posed and by the time the CBN responds to them, it may become apparent that some people within its employment failed or abdicated performing their jobs well or they colluded in foisting the current position of the bank on the stakeholders and the nation. Will they be sanctioned or rewarded? How long shall we continue to witness preventable banking crises? If this Skye Bank case had crystallised into liquidation, the extent of negative impact it would have had on the economy already known to be in recession and progressing very fast into depression would have been unimaginable.
Now that the bank has a second time chance to live, what must the new Board and Management be pre-occurred with to ensure significant progress is made within a record time? In my opinion, there are many very engaging and challenging issues to focus on, at least in the short to medium term. And they have to be embarked upon quickly.
In the minimum, the Board and Management should find and adopt pragmatic strategies to stabilise the bank, especially from the perspectives of ensuring employees’ high commitment and continued patronage by the existing customers. These will require assuring both staff and customers, in words and deeds that the worst is over. To achieve these will necessitate thorough re-orientation of the staff towards excellent service delivery, respect and courtesy to customers. As it were customers are the bedrock of any business success. As the greatest stakeholders in the bank if they are left to vote with their feet, the rest will become history. Thus, all over the bank, customers must be recognised and treated as kings and queens, princesses and princes that they are. If the bank’s management and staff require some form of re-training in this aspect of effective customer management and service, the bank should go for it.
It will pay excellent results in the short and long terms. Where availability of funds may be a constraint, the help of service providers that can offer extended credit periods or pro-bono services can be secured. Similarly, focused capacity building in various other critical areas should be pursued along the lines earlier suggested.
To be continued
Dr. Ogunbunka is President Bank Customers Association of Nigeria(BCAN)