Home Banking Nigeria central bank lifted depositors’ confidence in Polaris Bank intervention

Nigeria central bank lifted depositors’ confidence in Polaris Bank intervention

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The Central Bank of Nigeria’s (CBN’s) decision to protect depositors’ funds in the defunct Skye Bank and its smooth takeover by Polaris Bank Limited have raised bank customers’ confidence in the sector. Defunct Skye Bank relied on CBN’s intervention to stay afloat. The takeover and injection of N786 billion into Polaris Bank have kept it running efficiently in nearly three weeks of operation, writes COLLINS NWEZE.

IT was business as usual at defunct Skye Bank Plc on Friday, September 21. Many customers were busy carrying out their transactions without knowing that its end had come and a new lender would take over.

When the news broke around 6.pm, Polaris Bank Limited was established to assume defunct Skye Bank’s ownership as well as assets and liabilities.

Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, who broke the news to reporters, assured depositors that their funds were safe.

Emefiele,who spoke in the presence of Nigeria Deposit Insurance Corporation (NDIC) Managing Director, Umaru Ibrahim, and his Asset Management Corporation of Nigeria counterpart, Ahmed Kuru, said the banking sector’s stability remained a priority for the CBN.

He said the apex bank took the decision to stop Skye Bank from relying on CBN’s intervention to remain afloat. The defunct Skye Bank had been on CBN’s lifeline since July 2016 and the apex bank said it could no longer continue to intervene to keep the bank liquid.

The AMCON, which owns Polaris Bank, injected N786 billion into the new bank.The long-time loan was priced at single digit interest rate. New investors are expected to see the value in the new bank and buy it from the Federal Government.

The regulators’target was to save depositors’ funds and ensure the bank continued as a going concern, being a Systemically Important Bank (SIB).

Emefiele said the bank’s performance has improved considerably compared to the pre-July 2016 era.

“The result of our examinations and forensic audit of the bank have, however, revealed that Skye Bank requires urgent recapitalisation as it can no longer continue to live on borrowed times with indefinite liquidity support from the CBN. The shareholders of the bank have been unable to recapitalise it,” Emefiele said.

Post-capitalisation feedback

Findings by The Nation showed that transactions have continued smoothly at the branches of Polaris Bank since September 24, the first business day after the CBN withdrew Skye Bank licence.

At the bank’s Lagos branches in Ogba, Ikeja, Marina, Victoria Island and Matori as well as in Abuja, workers, clients and customers have been transacting businesses without hitches. The seamless transaction experiences have been replicated across branches of the bank nationwide.

Few customers that approached the customer service officers for clarifications on what the takeover meant for their deposits were assured that there was no cause for alarm.

However, bank managers and customer service officers had a more than normal flow of customers making inquiries, clarifications and assurances on the safety of their funds.

One Abuja-based customer, Mrs. Adeyemi Adeosun, an octogenarian and a school owner, said she initially went to the bank with a resolve to withdraw or transfer  her funds to another bank but changed her mind after discussing with the branch manager.

She said: “I came here to withdraw or transfer all my money in the bank because of the experiences I have had in the past with liquidated banks. When I heard the news about Skye Bank, I almost had a heart attack. After speaking with the branch manager, my confidence in the bank has been restored and my fears gone.”

Another customer, Moses Adigun, said on that weekend, he made up his mind on how to get his money from the bank.

His fears were, however, assuaged after his encounter with the bank’s customer representative who assured him that all was well.

Another customer, who came to open a current account at a branch of the bank in Ikeja, Lagos, said she was assured and adequately educated by the customers’ service representative that the bank is not in any form of crisis and that her funds were safe and secured.

She, however, did not like the fact that the current account form given to her still had the Skye Bank logo. The customer service officer had to use her pen to strike out the name and wrote Polaris Bank at the top of the account opening form.

Further checks across various branches of the bank showed that normal banking was on and many customers did not express any fear, especially with the injection of huge funds into the bank.

Ibrahim had also assured customers of the continued safety of their funds in furtherance of the regulatory authority’s resolve to proactively manage potential threats to financial system stability.

Kuru would soon speak on way forward for the new lender, especially on its sale to new investors.

AMCON Head Corporate Communication, Jude Nwauzor, said  Kuru was unavailable but would soon meet with financial reporters to brief them on the way forward for the new lender.

However, financial pundits said new investors were expected to see the value in the new bank and buy it from AMCON.

Besides, employees of defunct Skye Bank were absorbed by Polaris Bank under a new contract unless an employee decides to go.

Other stakeholders speak

The Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) lauded the CBN for revoking Skye Bank’s licence.

The union said the huge cash injected into Polaris Bank, was a bold move at ensuring the soundness and efficiency of the sector. It urged AMCON to ensure that the bank’s sale  be done under best practices.

ASSBIFI National President Comrade Oyinkan Olasanoye stated this while briefing reporters in Lagos. She said there was no need for panic.

Olasanoye noted that as at today, Polaris Bank has a clean balance sheet as it carries no toxic assets in its new balance sheet. “The bank is well positioned to meet its obligations to all its numerous customers,” she said.

She advised the bank’s numerous customers to continue to do business with it, adding that there was no cause for alarm.

Olasanoye said ASSBIFI, as a strategic partner in the sector, would study the purchase and assumption agreement, which established Polaris Bank and engage its management in discussions to ensure that it realised its vision, goals and objectives.

The president advised that only healthy financial institutions with clean balance sheets,  should participate in the exercise and the best among them made to pay.

Lagos-based financial analyst, Kingsley Abbey, said the revocation of the licence of the defunct Skye Bank and the assumption of the bank’s assets and liabilities by Polaris Bank Limited would help solve the lender’s solvency hitches.

He said the move by the regulators would help limit likely systemic failure in banking  and raise depositors’ confidence in the sector.

Analysts at CSL Stockbrokers Limited explained that since 2016, defunct Skye Bank had been under the close watch of the CBN after Central Bank discovered some unacceptable corporate governance lapses as well as the persistent failure of Skye Bank to meet minimum thresholds in critical prudential and adequacy ratios, which culminated in the bank’s permanent presence at the CBN Lending Window.

Polaris Bank Group Managing Director (GMD) Adetokunbo Abiru stated the efforts of the new management team to stabilise the defunct Skye Bank and reassured  stakeholders of the bank that it would have no problem meeting its obligations to corresponding banks, depositors, customers and other financial institutions.

He also stated that Polaris Bank had been established to assume ownership of the assets and liabilities of Skye Bank, while the management of the defunct bank had been retained for its good performance.

In an interview with ARISE News, the chief executive officer of the new bank said in the last two years, the bank, under the defunct Skye Bank, had met its obligations to all stakeholders and would continue to do with the current arrangement.

Explaining how the management had been able to stabilise the bank, Abiru said Polaris Bank has been fully capitalised and has the support of CBN and NDIC, adding that depositors are entitled to make withdrawals and are also encouraged to maintain their deposits and banking relationships with the bank.

He said: “Our major achievement was being able to stabilise the bank. You will recall that when the intervention was done in July 16, 2018, 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 stabilise the bank.

‘’Today, that has been achieved; we have also be able to bring a sense of corporate governance to the operation of the bank, and we have also been able to recover a lot of loans. And as we speak, we have been able to recover over N100 billion; that is a major achievement.’’

On the expectations from the new bank, Abiru assured its stakeholders, particularly depositors and customers, that their accounts would automatically migrate from the ex-Skye Bank to Polaris Bank, saying: “Polaris is a well-capitalised bank, which makes it a very strong bank, in term of corporate good governance and value and has a very strong backing of the regulators like CBN and NDIC.’’

SOURCE: THE NATION

 

 

 

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