By Kelechi Mgboji
Assistant Business Editor
The Central Bank of Nigeria (CBN) has appointed a new leadership for Skye Bank after it consistently failed to meet minimum capital ratios.
Briefing journalists in Lagos on Monday, CBN governor, Godwin Emefiele, said that Skye Bank’s non-performing loan ratio had been above the regulatory limit for a while its Credit Reserve Requirement (liquidity ratio) had remained below regulatory minimum for a while.
Emefiele said that CBN had met with Skye’s board to resolve the issues but the bank repeatedly failed in its efforts necessitating the Timothy Oguntayo leadership to resign to pave way for a new management to steer the bank out of trouble.
Emefiele said the apex
bank had conducted a stress test and decided to replace the chairman, chief executive and all non-executive directors after they failed to recapitalise the bank.
Consequently, Alhaji Muhammed Ahmed, a seasoned management expert, was appointed the chairman of the board of directors while Tokunboh Abiru, a former staff of First Bank and seasoned administrator, was appointed the managing director along with two other executive directors.
“The basic issue is capital adequacy and liquidity. From what we see, prudential adequacy and capital ratios of the bank have been weakening. We thought that it was not right for us to continue to allow these to weaken to the point get to point where it be irrecoverable and depositors money will be at risk. That’s why we have taken this action to nip this in the bud,” Emefiele stated.
He added that Skye had been a net borrower from its rediscount window, a CBN special lending window, for quite sometime but insisted that the bank is not in distress and remains capable to continue banking activity.
“I repeat here it has nothing to do with distress, and it is important that we understand that what we are trying to save is a situation where the depositors money will be at risk,” Emefiele clarified.
He explained that the board had come to the realisation that they have tried their best to turn the tide but could not, and that it was time they left so that a new board could come in and improve the position of the bank.
Skye Bank is designated as one of the systemically important banks due to the size of total sector deposits it holds after the acquisition of nationalised Mainstreet Bank in 2014.
This means it has to hold more capital, and could impact grievously on the economy in the event of a distress.
Last year, the regulator gave three commercial banks until June 2016 to recapitalise after they failed to hit a minimum capital adequacy rate of 10 percent, and Skye Bank turned out to be one of them.
The bank has been in talks with shareholders and new investors to raise N30 billion after it suspended plans for a rights issue last year due to weak market conditions.
Despite this emerging weakness, Emefiele said the overall banking industry was sound, and that none of the 21 commercial lenders were in distress.