– As Management Battles Negative Confidence
Investors in Nigeria’s equity market have begun to withdraw their patronage of shares of Skye Bank Plc following the recent corporate governance crisis that led to the sack of its leadership by the Central Bank of Nigeria (CBN).
This was disclosed on the floor of the Nigerian Stock Exchange (NSE) Friday, during the visit of Skye Bank’s Board and management to explain developments in the bank and to introduce the new leadership team.
According to the immediate past President, Association of Stockbroking Houses of Nigeria (ASHON), Rasheed Yussuf, the shares of Skye Bank had been dumped by investors resulting in huge volume lying dormant.
Yussuf, who spoke on behalf of the dealing members, lamented that investors had developed cold feet over Skye Bank shares, and advised the new management to work out plans that would restore investors’ confidence within a short time.
He commended the CBN for offering explanations that would restore public confidence in the bank, as the apex bank had said that deposits’ fund in Skye Bank was safe.
“Let me tell you one thing: You need to work very hard, very fast. As we speak, I have one hundred and fifty-something million shares of Skye Bank. Nobody is buying.
“We are ready to work with you. You need to come up with your plans quickly to reassure us. We represent the shareholders’ interest. When we see what the plans are, we are ready to work with you,” Yussuf said.
In his remarks, the newly appointed Chairman of Skye Bank, Alhaji Muhammad K. Ahmad, explained that the reconstitution of the board of the bank by CBN was not a takeover of the financial institution. He said it was an intervention to correct observed corporate governance issues under the old board.
While explaining that the ownership of Skye Bank remains in the hands of the shareholders, Ahmed said the CBN does not own the bank and has not taken over the bank, adding that CBN was fully behind Skye Bank and would support it to fully stabilize.
He further explained that the immediate past leadership of the bank resigned when it could not reposition the bank, and urged the stakeholders to support the bank’s new leadership.
“They said they tried their best but, unfortunately, they failed to address some corporate governance issues. We believe that with the support of the Market, the team before you today will ensure that those issues are addressed within a short period of time,” Ahmed said.
He assured that the Skye Bank’s fundamentals remain strong and that it remains one of Nigeria’s leading and retail banks.
Also, speaking on the occasion, the new Group Managing Director/Chief Executive Officer of the bank, Tokunbo Abiru, said the management team and the board would work to achieve value enhancement for shareholders, customers and other stakeholders.
He said this would be achieved 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.
Abiru described the reconstitution of the bank’s board as an intervention and not a takeover by the CBN, saying the lender’s fundamentals are good and strong.
He assured that the critical areas required to reposition the bank would be given adequate attention.
The CBN had on July 4, announced the change of management in Skye Bank, a move it described as unavoidable following the inability of the bank to correct its poor capital adequacy situation that had lingered for a long time.
“The Central Bank of Nigeria (CBN) would like to inform the general public of its decision to effect changes in key personnel on the Board and Management of Skye Bank PLC with effect from today Monday, 4th July 2016.
“Specifically, these changes relate to 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 CBN said in a statement signed by its Ag. Director, Corporate Communications, Isaac Okoroafor.
Explaining that the move was aimed at preventing Skye Bank from becoming distressed, the CBN drew attention to the bank’s persistent failure to meet minimum thresholds in critical operational areas.
It 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.”
Skye Bank’s shares had depreciated by 9.5 per cent on July 4, when the management change was announced by CBN, forcing it to close at 95k per share.
The shares dropped further by 8.42 per cent on the NSE Friday, following investors’ continued negative reaction to developments in the bank, losing 8k to close at 87k per share.
Other members of the reconstituted Board of Skye Bank are Bayo Sanni, Idris Yakubu, Markie Idowu and Abimbola Izu, all of whom were serving in the Executive Director capacity of the Bank prior to now.
Reassuring that Skye Bank was not in distress, the CBN said it would give the necessary support to the new management to ensure that the fortunes of the bank were restored soonest.
“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 CBN said.