Reaching for the sack: CBN fires management of troubled Skye Bank

Timothy Oguntayo

The Central Bank of Nigeria (CBN) has sacked the management of Skye Bank over the bank’s persistent failure to meet minimum thresholds in critical prudential and adequacy ratios, which has culminated in the bank’s permanent presence at the CBN Lending Window.

Chief Executive Officer and Group Managing Director, Timothy Oguntayo, who led Skye Bank to acquire Mainstreet Bank in 2014, left his position on Monday in anticipation of a CBN announcement.

The apex bank in a statement also confirmed that “the Chairman of the Board, all other Non-Executive Directors, the Independent Director, the Managing Director, the Deputy Managing Director and two longest serving Executive Directors have voluntarily resigned their appointments with immediate effect.

“In their place, we have selected industry experts and people of high integrity whom we believe can turn the bank around.

“In this regard, we have selected Alh. M. K. Ahmad to be the new Chairman while Mr. Adetokunbo Abiru would be the new Managing Director.

“The more recent executive directors will be allowed to remain to ensure continuity and a smooth transition.”

Customers have been advised not to panic as their investments and deposits are intact.

Skye Bank is thought to have an estimated non performing loan portfolio of N700 billion, much of which is due to an overexposure in the oil and gas sector.

Ratings agency Standard and Poor’s recently downgraded Skye Bank to ‘CCC’ on concerns over its capital adequacy and liquidity.

S & P noted that Skye Bank’s business and financial sustainability largely depends on Nigeria’s economy, which is under strain due to oil price and production shocks, persistent foreign currency liquidity shortages and slowing growth.

“We anticipate deterioration in Skye Bank’s asset quality metrics and profitability, which we think will markedly diminish the bank’s capital adequacy relative to the regulatory minimum and heighten refinancing risks. Consequently, we are lowering our global scale ratings on Skye Bank to ‘CCC+’ from ‘B-‘ and our national scale rating to ‘ngB+’ from ‘ngBB’ and placing them on CreditWatch with negative implications. The CreditWatch reflects our concerns over Skye Bank’s compliance with regulatory capital adequacy minimum and the confidence sensitivity of its funding base,” the agency said.

S & P also expressed its view that Skye Bank may have limited access to capital and foreign currency liquidity in the short term, in case of need.

The bank fired 175 staff in June.

Last year, the CBN gave three commercial banks until June 2016 to recapitalise after they failed to hit a minimum capital adequacy rate of 10 percent.