Skye Bank employee to get fresh contract under Polaris Bank –NDIC

The Central Bank had on Friday revoked the operating licence of Skye Bank Plc with immediate effect. Governor of the CBN, Mr. Godwin Emefiele, said during a press briefing in Lagos that Skye Bank would now be taken over by Polaris Bank, which would take over all the assets and liabilities of the defunct entity.

The CBN, in consultation with the Nigerian Deposit Insurance Corporation (NDIC), has established a bridge bank that will survive the bank known as Polaris. A bridge bank is a bank authorised to hold the asset and liabilities of another bank, specifically an insolvent bank

The NDIC in the statement said following the revocation of the operating license of Skye Bank by the CBN, the NDIC has commenced the processes for its liquidation.

The statement reads in part, “The NDIC carried out the Bridge Bank option to resolve the Skye Bank Plc in order make certain that its depositors are fully protected as their deposits with Polaris Bank limited remain insured under the NDIC Act.

Effective From Monday, all asset and liabilities of Skye Bank have been taken over by the new bridge bank, Polaris.

The customers of Skye Bank Plc can also continue to transact their businesses with Polaris Bank Limited thereby ensuring the non-disruption of their banking transactions.

“Furthermore, the adoption of the Bridge Bank model for the resolution Skye Bank Plc, guarantees that most of the employees of that bank will not lose their jobs and they will continue their employment with POLARIS Bank Limited under fresh contracts of employment.

“The NDIC, as Deposit Insurer, acted to ensure the continued safety of depositor’s funds and to proactively manage potential threats to financial system stability.”

Emefiele had said the decision to revoke the licence of the old bank was taken following the inability of the owners of the bank to shore up the capital of the distressed bank which had earlier received a N350bn intervention in July 2016.

On the 4th of July 2016, the CBN took a regulatory action on Skye Bank Nigeria PLC, leading to the resignation of the Chairman, all Non-Executive Directors on the Board as well as the Managing Director, Deputy Managing Director, and the two longest-serving Executive Directors on the Management Team.

The focus of CBN’s regulatory action then was to save depositors’ funds and to ensure that the bank continued as a going concern, being a systemically important bank. Part of the apex bank’s intention was also to stem the imminent job losses to staff if a liquidation option had been adopted.

Although CBN said the bank had improved after the ‘regulatory action’, the result of its forensic audit of the bank 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.

The strategy is for the Asset Management Company of Nigeria (AMCON) to capitalise the bridge bank and begin the process of sourcing investors to buy out AMCON.

At that time, he added, the action was informed by the unacceptable corporate governance lapses as well as the persistent failure of the bank to meet minimum thresholds in critical prudential and adequacy ratios, which culminated in the bank’s permanent presence at the CBN lending window.

According to the CBN, given the good performance of the board and management, the CBN shall retain them. In addition, all employees of Skye Bank shall be absorbed by Polaris Bank under a new contract unless any employee decides to opt out.

By Monday, customers of Skye Bank shall be automatic customers of the new bank and their accounts and records duly purchased by Polaris Bank to enable customers to transact their businesses seamlessly.

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