Skye Bank: Initial reports indict directors

Initial surveillance reports by the Central Bank of Nigeria (CBN) and management report by the new management have indicted the former board and management of Skye Bank Plc of poor corporate governance practices and insider abuses.

The CBN had last Monday sacked the board and management of Skye Bank and appointed new directors to run the affairs of the bank.

Those affected by the whirlwinds included the chairman, Dr Olatunde Ayeni, all non executive directors, the group managing director, Mr. Timothy Oguntayo; deputy group managing director, Mrs Amaka Onwughalu and two longest-serving executive directors – Mr Dotun Adeniyi and Mrs Ibiye Ekong.

The apex bank appointed Alhaji Muhammad Ahmad, the founding director general of the National Pension Commission (Pencom), as the new chairman and Mr. Tokunbo Abiru, a former commissioner for finance in Lagos state and executive director at First Bank of Nigeria as the new group managing director.

Sources in the know said the preliminary reports had shown sufficient causes that the bank’s fortunes nose-dived because of alleged poor corporate governance issues by the former directors of the bank. The new board and management of the bank have launched a further investigative report to detail the alleged abuses and extricate them for possible actions.

Sources in the know said some directors, especially leading non-executive directors, had used their positions to secure huge loans from the bank, which performance weighed down the loan book of the bank.

Read also: Skye bank and failure of leadership

A source said Skye Bank also allegedly took loan from the African Export and Import Bank (Afrexim) to finance the purchase of Mainstreet Bank Limited, banking on the public accounts of the acquired banks and its Northern market.

Skye Bank paid some N120 billion to acquire Mainstreet Bank Limited from the Asset Management Corporation of Nigeria (AMCON). The deal saw the share price of Skye Bank rising to N4 per share at the stock market.

The source however said the implementation of the Treasury Single Account (TSA), which pooled government revenue accounts to the CBN and the violent crisis in the North worked against early gains from the acquisition. The source accused the bank of overleveraging to cover up its weak credit risk management.

The source noted that it got to a point that Skye Bank was not able to pay the entitlements accruable to staff over the acquisition and only made technical payments to the affected staff by showing the payment as unclear balance in their accounts.

The new chairman of the bank, Ahmad, at the weekend during a visit to the Exchange, confirmed that the main problem with the bank was “corporate governance issues under the old board”.

He said the apex bank’s intervention was not a takeover of the ownership of the bank but a corrective interventionist mission aimed at salvaging the bank by stabilizing its operations.

He reassured the bank’s customers and investors that the bank was not distressed but only had corporate governance issues under the old board adding that the bank’s fundamentals remain strong and it remains one of Nigeria’s leading and retail banks.

Also, Abiru said the management team and the board would work to achieve value enhancement for shareholders, customers and other stakeholders by bringing the cost-income ratio to acceptable levels, improve the risk assets quality and work towards increasing the liquidity and capital adequacy of the bank.

Governor of CBN, Mr. Godwin Emefiele, had said the former directors had to leave because they have persistently failed to turn around the fortunes of the bank. The apex bank particularly made reference to the loan book and capital adequacy of the bank, noting that the bank’s non-performing loans are well above industry threshold and its capital adequacy below the minimum regulatory requirement.

 

 

 

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