The liquidity crisis
ravaging the banking industry consumed its first set of victims, yesterday,
with the resignation of 12 directors of Skye Bank Plc, including the Chairman,
Dr. Olatunde Ayeni, and Managing Director/Chief Executive Officer, Mr. Timothy
Oguntayo. The CBN also, yesterday, announced the appointment of Mr. M.K. Ahmad
and Mr. Tokunbo Abiru as the new Chairman and Chief Executive of the bank,
respectively. The directors of Skye Bank sacked alongside Ayeni and Oguntayo
include three executive directors and seven non executive directors. The
executive directors are Mrs. Amaka Onwughalu, Deputy Managing Director; Mr.
Dotun Adeniyi, Mrs Ibiye Ekong. The non executive directors are Mr. Victor
Adenigbagbe, Dr. Jason Fadeyi, Mr. Babajide Agbabiaka, Mr. Victor Odozi, Mr.
Kunle Aluko, Mr. Abdul Bello and Mrs. Ammuna Lawan Ali. Chairman, Dr. Olatunde
Ayeni, and Managing Director/Chief Executive Officer, Mr. Timothy
OguntayoChairman, Dr. Olatunde Ayeni, and Managing Director/Chief Executive
Officer, Mr. Timothy Oguntayo Why Ayeni, Oguntayo resigned: The banking
industry in recent times has been gripped with scarcity of funds, with some
banks relying on loans from the CBN to fund their operations. Two weeks ago
banks’ borrowing from CBN, through its Standing Lending Facility (SLF)
skyrocketed by 230% to N929 billion, indicating that Skye Bank is not the only
bank in the liquidity trap. While announcing the reconstitution of the board of
SkyeBank Plc, including the Chairman, Dr. Olatunde Ayeni, and Managing
Director/Chief Executive Officer, Mr. Timothy Oguntayo. The CBN also,
yesterday, announced the appointment of Mr. M.K. Ahmad and Mr. Tokunbo Abiru as
the new Chairman and Chief Executive of the bank, respectively. The directors
of Skye Bank sacked alongside Ayeni and Oguntayo include three executive
directors and seven non executive directors. The executive directors are Mrs.
Amaka Onwughalu, Deputy Managing Director; Mr. Dotun Adeniyi, Mrs Ibiye Ekong.
The non executive directors are Mr. Victor Adenigbagbe, Dr. Jason Fadeyi, Mr.
Babajide Agbabiaka, Mr. Victor Odozi, Mr. Kunle Aluko, Mr. Abdul Bello and Mrs.
Ammuna Lawan Ali. Chairman, Dr. Olatunde Ayeni, and Managing Director/Chief
Executive Officer, Mr. Timothy OguntayoChairman, Dr. Olatunde Ayeni, and
Managing Director/Chief Executive Officer, Mr. Timothy Oguntayo Why Ayeni,
Oguntayo resigned: The banking industry in recent times has been gripped with
scarcity of funds, with some banks relying on loans from the CBN to fund their
operations. Two weeks ago banks’ borrowing from CBN, through its Standing
Lending Facility (SLF) skyrocketed by 230% to N929 billion, indicating that
Skye Bank is not the only bank in the liquidity trap. While announcing the
reconstitution of the board of Skye Bank Plc, CBN Governor, Mr. Godwin Emefiele
confirmed that the bank has been a regular customer of its lending facility,
indicating deterioration of the financial condition of the bank. Speaking at a
press conference in Lagos, Emefiele said that the reconstitution of the board
of the bank was due to persistent decline in the bank’s liquidity ratio and
increase in its non-performing loans. He said, “These proactive moves have
become unavoidable in view of the persistent failure of Skye Bank PLC to meet
minimum thresholds in critical prudential and adequacy ratios, which has
culminated in the bank’s permanent presence at the CBN Lending Window. In
particular, Skye Bank’s Liquidity and Non-performing loan Ratios have been
below and above the required thresholds, respectively, for quite a while. “To
correct the anomalies in the bank, the CBN had several meetings with the
management and board of Skye bank as part of our strategy of close engagement
whenever a bank’s financial or governance situation poses potential threats to
the overall stability of our financial system. Despite the expectation of relevant
regulators, market watchers, financial analysts and interested stakeholders
that Skye Bank should be doing much better than it is right now, we have seen
about the opposite in reality. Declining health of the bank “Given the
aforementioned issues and the fact that Skye bank is a Domestic Systematically
Important Bank (SIB) with significant interconnectedness, the CBN would be
failing in its duties if it does not take immediate action to nip the steadily
declining health of the bank in the bud and correct the situation. “In view of
the long grace period allowed the bank to correct the situation, we came to the
conclusion that, although the existing board had done its best to steer the
ship it had come to a realization that it would be unable to bring the bank out
of its present precarious situation. “Fortunately, and in the overall interest
of the bank, the Chairman and some board members have decided to resign their
appointments from the bank. “Consequently, by virtue of the powers vested in
the Governor of the CBN, we have decided to reconstitute the Board and
Management of the bank, and appoint new members with the sole responsibility of
ensuring the speedy restoration of the health of the bank. “To this effect, 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 Alhaji 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. “It
will be recalled that the medium-term vision of the CBN, which was unveiled in
June 2014, indicated that the bank would proactively manage potential threats
to financial stability, maintain zero tolerance on practices that undermine the
health of financial institutions, and create a strong governance regime that is
conducive for financial intermediation, innovative finance and inclusiveness.
It is in furtherance of these commitments that the CBN has made the changes and
assures the incoming Board and Management of its unflinching support during
this transition period.” Depositors of Skye Bank should not panic Emefiele
however assured depositors of Skye bank of the safety of their money in the
bank saying there is no need to panic as the bank is not in distress. He said,
“It is important to reiterate the fact that Skye Bank is not in distress and
remains a healthy bank in the system. The CBN hereby assures depositors,
shareholders and all relevant stakeholders that there is no reason for concern
or panic as we seek their continued cooperation at this time. It is our
expectation that the shareholders and remaining Executive Directors will work
seamlessly with the new team to ensure that the fortunes of the bank are
restored in the shortest possible time. “The three most important issues in
every bank are NPL, capital adequacy and its liquidity situation. What we have
seen since around late 2013 is that these prudential and adequacy ratios of this
bank have been weakening and we thought it is not right for us to allow these
to continue to weaken to a point where it gets irreversible or recovery
situation and that is why we decide to take this action and nip it in the bud
“I repeat it has nothing to do with been distressed, and it is important that
we take it that what we are trying to say is that we don’t want the prudential
and adequacy ratios of this bank to worsened to the point where depositors
funds get into risk and that is why we take this decision. “The board
themselves have come to realisation that they tried their best and it is about
time for them to say, “Well lets bow out at this time so that a new team can
come in and run the bank and improve the position of the bank. “What we see is
that by the time the recapitalisation values are recomputed, there is some
weakening in value but it has not eroded the recapitalisation and values but we
are just hoping that has the new team comes up, off course the values will
definitely improve. Banking industry not distressed Speaking further, Emefiele
dismissed speculations that some other banks are in distress saying the
strategic health of the industry is good. He said, “As a regulator, we owe you
current information, the strategic health of the banking industry remains good
and when there is a need to inform general public about the strategic health of
any bank, just as we have done in this case, we would do, but i want to assure
everybody the strategic health of the banking industry is still good at this
time. No doubt there are, as a result of the global shocks, there certain
weaning of certain ratios but those ratios have not weakened to the point where
we can say the banking industry is distressed. We would like to appeal to all
depositors to be calm; there is no need to live in the impression that any bank
is distressed. We would be holding discussions with NDIC, and I want to assure
all of us that no depositor, no deposit is at risk at this time. Customers
should continue to do their business the way they have been conducting them in
all the banks.” The New Helmsmen of Skye Bank The Chairman of Skye Bank, Alhaji
M. K Ahmad, was the pioneer Director General, Pension Commission of Nigeria
(PenCom). He was also a pioneer staff of the Nigeria Deposit Insurance Company
(NDIC) where he rose to become a Director. He has also served on the Board of
various companies and committees including banks and not-for-profit
organizations. The Managing Director/Chief Executive of Skye Bank, Mr.Abiru was
until recently an Executive Director in First Bank PLC. He was also Lagos State
Commissioner of Finance from 2011 to 2013.
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