The Central Bank of Nigeria has extended a “short-term” loan to Skye Bank to enable it stabilise its operations after a panic withdrawal that ensued due to a massive resignations at the Board and Management level of the bank.
The Central Bank’s extension of a loan which can be viewed as a bailout is seen as an expression of confidence that the new Management and Board of the company can turn things around if given time and liquidity.
It is also viewed as an attempt by the Central Bank to instill confidence into the financial sector while also avoiding any possible contagion that may occur due to fear or lack of confidence in the financial sector.
Central Bank Spokesman Isaac Okoronkwo confirmed the panic withdrawal by the bank’s customers.
“We provide a short-term facility to help them manage the panic withdrawal that happened….In order to support the new management we decided to give them some money, just to support them,”
Mr Okorafor did not reveal how much money was granted to Skye, the interest rates or when they are expected to repay the loan. Skye Bank shares has rebounded to about 85 kobo per share after dropping to as low as 66 kobo in the wake of the massive resignations.
Skye Bank is also a systemic important bank and for that reason can be considered as one of those banks the CBN believes is “too big to fail”. This move is likely to restore some confidence in attracting customer deposits in the bank.
