The Nigeria Deposit Insurance Corporation (NDIC) on Monday revealed that bad management played a part in the eventual failure of Nigeria’s former mid-tier lender, Skye Bank Plc.
The deposit insurance agency also disclosed that it has been monitoring recent investigations into the failed bank, with the specific intention of determining whether or not the bank’s management contributed to its failure.
“The corporation’s risk assessment and forensic investigation reports revealed that the erstwhile management of the failed Skye Bank contributed to its failure.” – NDIC
Meanwhile, having ascertained this fact, the agency did not make known its next course of action. It should, however, be recalled that the NDIC had in recent past made known its determination to ensure that anyone responsible for the bank’s failure faces the law.
The planned prosecution is expected to serve as a deterrent to mismanagement of corporate entities especially bank, as well as send across a strong message that the Government would no longer keep bailing failed financial institutions even as those who mismanage them go scot-free.
The Government did pump in billions in efforts to save Skye Bank
As we reported, the Central Bank of Nigeria (CBN) had in September announced the immediate revocation of Skye Bank’s operating license. According to the apex bank, the company needed recapitalisation and its shareholders were unable to do so.
A few days following this announcement, the CBN Governor, Godwin Emefiele disclosed that the Government had pumped nearly N800 billion into the bank in efforts to save it.
Apparently, Skye Bank’s entire share capital was, at some point, in negative territory due to Non-Performing loans. The situation quickly deteriorated, even as the CBN had no choice than to withdraw the bank’s license.
The bridge bank…
Working in consultation with the Nigerian Deposit Insurance Corporation (NDIC), the CBN decided to create a bridge bank called Polaris Bank Limited, which the Asset Management Company of Nigeria (AMCON) will recapitalise and sell. At the moment, AMCON owns the institution. It has yet to find a buyer.