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Some Nigerians flay the establish of Polaris Bank which replaced Skye Bank Plc. while others laud the Central Bank of Nigeria for acting timely to save depositors’ money

By Emeka Ejere

Mixed reactions have continued to trail the birth of Polaris Bank which replaced Skye Bank Plc whose license was revoked by the Central Bank of Nigeria, CBN. The customers of the defunct Skye Bank, see the new bank as a preclusion of a financial disaster that would have thrown many homes into agony while the shareholders believe it was an unwarranted injury inflicted on the investors who have now lost their investments in the defunct bank for no fault of theirs.

Also, the CBN thinks its action was a timely intervention not only to protect depositors’ money, but also to save the jobs of the staff and management team members of the defunct Skye Bank who now drive Polaris Bank.

Polaris Bank began which operations nationwide  on Monday, September 24 is already  business in 370 branches across the country with N786 billion CBN gave it as a take-off grant.

The CBN had on Friday, September 21, pronounced Skye Bank defunct and handed its assets and liabilities over to Polaris Bank, with a take-off grant of N786 billion.

The defunct Skye Bank had lost billions of naira prior to the 2015 general election. Even before then, there were widespread insinuations that it was grappling with monumental crisis occasioned by dearth of corporate governance and abuse of process that resulted in frittering away huge sums by its former board and management.

Indications that Skye Bank was waiting to be defunct began to emerge in 2016 when customers who approached the bank for withdrawals were politely advised to wait until depositors had deposited money before they could be paid.

Godwin Emefiele, CBN governor,  had told the media that the operating licence of Skye Bank had been withdrawn, explaining that the bank was no longer a going concern, despite the intervention from the apex bank in 2016, among other reasons.

In withdrawing the bank’s operating licence, the CBN said there was need to protect the depositors funds, hence the recourse to Polaris Bank, a bridge bank to assume ownership of the assets and liabilities after due consultation with the Assets Management Company of Nigeria, AMCON, and Nigeria Deposit Insurance Corporation, NDIC.

But the CBN had retained the board members and management it constituted after the old ones were sacked. The board and management the CBN retained, with the old employees of defunct Skye Bank, will drive Polaris Bank.

While justifying the regulatory action, Isaac Okorafor, director of Corporate Communication at CBN, recalled that a total of N327 billion was injected in the defunct Skye Bank from July 2016 till when its licence was revoked, all in an attempt to shore up its liquidity status and enable the bank exit the crisis it was in before 2016 CBN intervention.

Okorafor, who featured on Channels Television breakfast show, Sunrise, explained that while the sum of N100 billion was originally given to the defunct Skye Bank by CBN in 2016, the apex bank kept intervening from time to time such that, over a period of time from July 2016 till when the operating license was revoked, N327billion had been given to the bank.

The CBN provided the lifeline (liquidity) to the bank in 2016 because it was technically insolvent. The idea was to help the new board and management the CBN put in place stabilize and return the bank to profitability on all sides.

However, ahead of the revocation of its licence and appointment of a bridge bank, the bank had persistently failed to meet minimum thresholds in critical prudential and capital adequacy ratios

But Adetokunbo Abiru, group managing director of Polaris Bank, who is also the leader of the board and management that served as undertakers for the defunct Skye Bank believes he and his team had a pass mark.

On Arise News Television over his achievement in stabilizing the bank, Abiru said: “Our major achievement was being able to stabilize the bank. If you recalled, when the intervention was done in July 2016, there was a major run on the operation of the bank, and part of what we have been able to do, is to find a way to stabilize the bank.

“Today, that has been achieved. We have also been able to bring a sense of corporate governance to the operation of the bank, and we have also been able to recover lots of loans. And as we speak today, we have been able to recover over a hundred billion naira; that is a major achievement.

“We didn’t even stop at that. We have also been able to improve on the collateral documentations on the performing loans, which have made lots of debtors to come in terms of repayment structure. To a very large extent, that is why the regulator, CBN, has confidence in us.

“If you look at what happened in the past, it was as a result of lack of corporate good governance and challenges created by insider-related loans of the former bank, but this has been corrected in the last two years we have been in the bank.

“All we need to do is to make sure all those values are maintained and make sure the bank is run on a very creditable basis and with every sense of corporate good governance.”

However, discerning minds are trying to find justification in CBN’s retention of the same board and management which had clear mandate on how to exit the now defunct Skye Bank from that of a dying bank to one of profitability, which they could not do.

They argue that if those board members and their management were indeed turn-around artists, how come the bank still died in their hands? How come under their watch the cumulative N327 billion the CBN injected in the defunct Skye Bank as liquidity support could only produce a name change?

They also argue that if the board and management the CBN has lauded so well for doing a good job and still wants them to continue piloting the affairs of Polaris Bank were actually successful, how come they were unable to attract the desired investors to give the bank all the stability it deserved and save its licence from being withdrawn?

A financial expert, who wishes anonymity, alleged that the CBN is complicit in the entire defunct Skye Bank dilemma that produced Polaris Bank.

He argued that imposing the same board and management it appointed “which finally ran the bank aground on a new one and even entrusting bigger resources in their care suggests nothing other than that the CBN is an interested party for the wrong reason.

He speaks further: “On a face value, it does appear the CBN had solved the problems that led to the death of Skye Bank. I do not think so.

“Many also will not think so. Instead, the apex bank may have succeeded in throwing up bigger issues around ownership of the Polaris Bank as we may likely experience in future regardless of the NDIC and AMCON involvement in the emergence of the bridge bank.

“I do not see how a man who invested, say  N200 million in a bank few years ago should be asked to go home and forget such huge investment simply because  the supervisory bank had empowered the board and management it put in place to determine the new investors and perhaps, with an understanding with NDIC, ANCON and CBN.”

He said the argument that the shareholders were not ready to recapitalise the defunct bank is neither here nor there because as the regulatory body, the CBN owed the investors all the genuine explanations and necessary reassurance that could have assisted them in parting with their funds again after their initial investment was mismanaged.

If the defunct Skye Bank investors were not given such opportunities, would you expect them not to fight the new order?, the financial expert queried.

On his part, Wale Ajibade, managing director, Blackbit Limited, describes investors of defunct Skye Bank as the major losers in the recent takeover of the bank by regulatory authorities

He said: “Equity investors essentially take a risk on companies. In good times, they benefit, and in bad times, they are the first to take a hit.

“So, the investors in the defunct Skye Bank have lost their investments because as of today, the bank has ceased to exist. This spells the end of all their investments. In America, they call it bankruptcy or chapter 11.

He said in this kind of situation, debtors tend to have a higher claim than equity holders.

“So, for equity holders, they have lost out their entire stake in the bank. Every shareholder in Skye Bank has nothing to take home. It is only the customers, debtors and creditors that are going to be answerable to the new bank.”

Boniface Okezie, national coordinator, Progressive Shareholders Association of Nigeria, said the CBN needed to explain its actions to Nigerians for better understanding.

Okezie said the apex bank needed to find a lasting solution to the banking sector crisis which, he said, was becoming an embarrassment not only to government but to the investing public.

While holding CBN responsible for the development in Skye Bank because it granted the bank the approval to acquire Afribank, Okezie cautioned that the investors should not be allowed to suffer again for the misdeeds and mistakes of the regulations.

He called on the federal government to investigate the incessant fall of banks in the country, insisting that the past management and board of Skye Bank must be made to account of what led to the bank’s misfortune.

But according to a source close to CBN, those championing the campaign against Polaris Bank are the same people who ruined Skye Bank.

The source alleged that their plot was to create a run on Polaris Bank in order to cover their tracks and mask their abortive attempt to defraud both the depositors and shareholders of Skye Bank.

The source said: “What a wicked generation of rogues who claim to be investors in a bank? After sharing depositors funds to themselves by way of non-performing loans, denying shareholders their investments, now they also wanted to defraud depositors.

“But for the timely intervention of CBN and Nigeria Deposit Insurance Corporation, NDIC, to save the masses of Nigerians who banked with Skye bank most of the tens of millions of Skye Bank depositors would have been crying today.”

– Oct. 6, 2018 @ 13:15 GMT |

Tags: Polaris Bank: In whose interest?