Who came on posts of executive chairman and CEO instead of the last directors? What did the governor in Lagos say about the situation in Nigerian banks? Read the article to learn.
Liquidity crisis, which plunges banking to ruin, has absorbed the first company of the victims. 12 directors of Skye Bank Plc, including the Skye bank Plc chairman Dr. Olatunde Ayeni and CEO and executive chairman, Mr. Timothy Oguntayo, have resigned. CBN also declared purpose of Mr. M.K. Ahmad and Mr. Tokunbo Abiru as new chairmen in Skye bank Plc head office. Besides the left heads of the bank, also three executive directors and seven not executive directors refused a position: Mrs. Amaka Onwughalu – Deputy Managing Director, Mr. Dotun Adeniyi, Mrs Ibiye Ekong, the non-executive directors – Mr. Victor Adenigbagbe, Dr. Jason Fadeyi, Mr. Babajide Agbabiaka, Mr. Victor Odozi, Mr. Kunle Aluko, Mr. Abdul Bello and Mrs. Ammuna Lawan Ali.
Bank development has recently suffered from deficiency of funds in some banks, relying on the credits from CBN to finance their actions. Two weeks ago loan of banks at CBN through Standing Lending Facility (SLF) has flown up for 230% and has reached N 929 billion. It meant that Skye Bank Plc Lagos is not the only bank in a liquidity trap. Declaring a reconstruction of council of Skye Bank Plc, the governor has confirmed that the bank was a regular customer of the proceeds of credit. He has pointed to sharp deterioration of financial conditions of the bank.
Speaking at press conference in Lagos, the governor has told that the reconstruction of council of the bank happened because of continuous decrease in coefficient of bank liquidity and increase in its idle credits. He has told, ‘These steps became inevitable in view of continuous refusal of Skye Bank PLC to pay the minimum thresholds. At last, it has reached the highest point. Liquidity of Skye Bank and Non-performing loan were below or above the thresholds meeting standard for a long time’.
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‘To correct anomalies in bank, CBN had several meetings with management and council of Skye bank. They became part of company every time when financial bank posed potential threat of full stability of our financial system. Despite expectation of the corresponding regulators, observers of the market, financial analysts and interested parties, which Skye Bank had to surpass, it was engaged opposite actually’.
Considering above-mentioned problems and the fact that Skye bank is Systematically Important Bank (SIB) with considerable interconnectivity, CBN would fail in performance of its duties if measures immediately wouldn’t be taken to correct the situation.
‘In view of the long grace period resolved by bank to correct a situation we have come to a conclusion that though the existing management has used the best efforts to operate the company, these actions will be incapable to remove bank of the existing dangerous situation. Fortunately, in full interests of bank the chairman and some board members have decided to leave its appointments. Therefore, on the basis of authority, which the governor of CBN had given to employees, we have decided to recreate Council and management of bank and to appoint new participants with exclusive responsibility of ensuring fast restoration of the bank. For this purpose the chairman of the board, all other careless directors, the uninterested board member, the executive director, the deputy-managing director and two executive directors of service have voluntarily left their positions’.
‘Instead of them, we have elected experts in industry and people having the high level of professionalism. We believe that they can turn bank running again. In this regard, we have chosen Alhaji M. K. Ahmad as the new chairman, while Mr. Adetokunbo Abiru will pull together with our new executive director. Smooth transition to new position will be guaranteed to the subsequent executive directors.
We will remind that predictions of CBN, which was presented in June 2014, specified that the bank will operate potential threats of financial stability in advance, support rejection by methods, which affect the health of financial institutions and to create strong control mode, which promotes for financial mediation and innovative finance. In assistance of these obligations, CBN has made changes and assures council and management to give support during this transition period’ – Mr. Emefiele said.
Continuing the speech, Emefiele has rejected assumptions that some other banks are in disaster, saying that strategic health of the industry is in satisfactory condition. He has told: ‘As regulators, we have to give you the current information, namely that the strategic condition of banking sector remains good. When there is a requirement to report to general public about a strategic condition of any bank, we will do it as now. Undoubtedly, global revolutions were resulted by certain losses. We would like to address all investors that they were quiet. There is no need to think that any bank will be ruined soon. We discussed this situation with NDIC, and I want to assure everyone that any investor and deposits are not in danger. Clients can continue to do the business in a way they acted with all banks before’ – he added.