Massive withdrawal worsens Skye Bank’s health

Despite assurances from the Central Bank of Nigeria(CBN) that Skye Bank is healthy, its big-time depositors are still reluctant to return their massive withdrawals from the bank in the past one month.

It was learnt that in the past two weeks, Skye Bank vault was drying up as transfer of deposits to other competing banks has intensified, with competing banks offering favourable deposit environment to the embattled bank’s customers.

The bank’s problem started when the apex bank sacked its board and management and later directed AMCON to buy up its toxic loans, 60 percent of which were taken by board members and their cronies.

Skye’s non-performing loans had mounted to 13 percent of total loans at the end of last year, well above the central bank target of less than 5 percent while its capital ratio was 10.4 percent last year, compared with an industry standard of 16 percent, prompting the central bank to step in.

The central bank injected more than N100 billion ($312 million) into the bank last month after sacking its top management for failing to meet minimum capital requirements. It subsequently replaced Skye’s top management.

Fear that about 25 percent of its branches may be shut, any moment from now, has also been seen among the staff, as they were seen wearing long faces.

Disturbed by the negative impact on the bank, CBN spokesman, Isaac Okorafor, in a statement said: “The attention of the Central Bank of Nigeria (CBN) has been drawn to the content of a malicious message urging customers of Skye Bank to withdraw their deposits or transfer them to other banks based on the vile allegation that Skye Bank has been liquidated by the CBN,”

Skye is the only Nigerian bank to report a loss in 2015. The central bank stepped in after depositors started withdrawing funds and avert wider problems within the banking sector. Africa’s top oil producer is struggling with one of the most severe economic crises it has had in decades.

The foot-dragging of potential buyers of the bank has also hiked its crisis with last-minute withdrawal of the interest shown by two local banks and one Europe-based financial institution from it. CBN Governor, Godwin Emefiele, has also acknowledged the panic measure, saying he is on top of the problem.

By Emma Eke

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