CBN extend’s Skye Bank life support for one year

Central Bank of Nigeria has extended its guarantees to Skye Bank for another one year while it considers the bank’s recapitalisation proposal, Skye Bank said in a release. It will be recalled that the CBN granted the bank a life support facility of a N100 billion capital injection, after sacking its top management for failing to meet minimum capital requirements. It then appointed a new management team.

The bank said it had recovered N60 billion of its outstanding non performing loans, closed some branches and sold four subsidiaries to boost capital in the last one year.
Skye’s problems started after it used short-term funds to buy Mainstreet Bank that was nationalised by the then CBN governor Sanusi Lamido Sanusi in 2014 but failed to raise fresh cash. It was in talks with shareholders and investors last year to raise N30 billion but suspended the plans when weak oil prices hit capital markets and drove foreign investors away.

“The bank continues to require assistance from central bank and government as it repairs the damage inflicted on the institution in the past and charts a sustainable path forward for the bank,” Skye bank said in a statement. It said it had reached restructuring agreements with many of the chronic bad debtors resulting in improved payments and prospects of future recoveries, it said.
Skye Bank shares rose more than 3 per cent on Tuesday on the floor of the Nigerian Stock Exchange and were up 16 per cent this year, after last year’s 68 per cent plunge.

The bank, which posted a pre-tax loss in 2015, said it had submitted its 2016 accounts for approval.
The central bank designated Skye as one of Nigeria’s systemically important banks due to the size of total deposits it holds after it acquired Mainstreet Bank. This means it has to increase its capital ratio to 16 per cent, the industry average. The bank said it has appointed advisers to guide it on a recapitalisation process and that it has identified various options with proposals being considered by the central bank.