Skye Bank Plc has disclosed that it received more than N100 billion or US$315 million in liquidity from the Central Bank of Nigeria (CBN), which was in a move to boost its operation and ensure customer confidence in the nation’s banking industry.
The injection of the whopping multi-billion naira was said to have been necessary, due to inability of the immediate past top management of the bank to meet minimum capital requirements, which eventually led to their sacking by the apex industry regulator.
The Managing Director/Chief Executive Officer of the bank, Mr. Adetokunbo Abiru, at the weekend stated that the bank exposure to Oil and Gas sector during the boom period highly contributed to the pre-tax loss recorded in the financial year ended December 31, 2015.
While addressing newsmen in Lagos, Abiru said that the Central bank staffers have been working for two weeks inside the Skye headquarters in Lagos to support the lender.
He explained that Skye Bank as the eighth-largest bank in the country declared drop in its Profit before Tax (PAT) last year, because of the high Non Performing Loans (NPL) accrued from oil-related debts and withdrawals of public sector deposits through introduction of Treasury Single Account (TSA) by the Federal Government of Nigeria.
Taking necessary precautions to avert poor financial performance, Abiru, noted that the bank under his leadership would conduct an audit to see what the new management of the bank inherited and establish how much liquidity was needed.
Pointing out some of the steps to be taken later this year, so as to turn the future of the bank around, he said, “We hoped to have an overview by December after which Skye could focus on being a frontline retail bank. Some branches would be closed to bring down costs, pending approval from the CBN.”
The lender’s NPL stood at 13 percent as at the end of last year, representing an eight percent higher than the required five percent by the CBN.
His words: “The losses largely arose from issues relating to the cost-income ratio which was “above the industry standard”, plus “the liquidity challenge as well and asset quality issues, and the resulting effect of all that.”
The bank also explained how the introduction of the TSA by the FG had affected its financial status, which was attributed to the bank high dependence on public sector debt deposits, since the commencement of the full implementation of the TSA on September 15th, 2015.
However, it is worthy of note that half of Skye’s bank loans book was in foreign currency from the oil industry which has been hit by low crude prices.
“The bank’s capital adequacy ratio was 10.4 percent last year, compared with an industry standard of 16 percent, and its cost to income ratio was “close to” 103 percent, rather than the standard of about 65 percent”, he added.
Consequently, the CBN, through its Governor, Godwin Emefiele, and the corporate communication department have reiterated severally that there is no need urged the general populaces not to panic about the banking system.