With CBN-appointed Management, New Lease of Life for Skye Bank

Adetokunbo Abiru

The recent takeover of Skye Bank PLC by the Central Bank of Nigeria (CBN) has revealed the operator’s failure to meet the mandatory requirement but the new management appointed for the bank is expected to ensure standard level of adequacy, writes Obinna Chima

Following the regulatory intervention at Skye Bank Plc last week which saw the resignation of the former chairman, board and management of the bank, the Central Bank of Nigeria (CBN) appointed a new chairman who as a result of his antecedents in the financial sector can be described as a turnaround expert.

Also appointed was a new managing director for the bank as well as the reconstitution of its board. These new board and management team are expected to help reshape the bank, which had been hit by liquidity crisis.

While Alhaji M. K. Ahmad has been appointed the new chairman, Mr. Adetokunbo Abiru is the new CEO of the bank. Other members of the reconstituted board are Bayo Sanni, Idris Yakubu, Markie Idowu and Abimbola Izu, all of whom were executive directors of the bank few months before the intervention by the CBN.

Ahmad …the New Chairman

Muhammad K. Ahmad has about 35-year distinguished experience leading and working in various public sector organizations and financial services institutions in Nigeria. He was the pioneer Director General and Chief Executive Officer of the National Pension Commission and oversaw the establishment and growth of the pension industry in Nigeria, which currently boasts of over N5 trillion in assets and a major contributor to Nigeria’s gross domestic product. He is currently the Chairman of the Interim Management Board, International Energy Assurance and is the founder of Jewel Development Foundation, a graduate assistant platform; and Certium Consulting, a strategy advisory and business applications company.

A pioneer staff of the Nigeria Deposit Insurance Corporation (NDIC), Ahmad rose to become a director in the corporation. He has served on the boards of various corporate and not-for-profit organisations as well as presidential committees. Ahmad chairs the Technical Committee that produced the North-east Transformation Strategy (NESTS), a medium term Regional Development Strategy, for the sustainable socio-economic transformation and reconstruction of the region and currently supervises its implementation.

The new Skye Bank chairman was a director on the Board of FBN Holdings PLC, where he brought his rich experience in the financial services industry to bear on the institution.

Ahmad strongly promotes building institutions based on the highest corporate governance and ethical standards and would bring his extensive experience to bear on his role on the board of Skye Bank PLC as Chairman. He has a Masters Diploma in Innovation and Strategy from University of Oxford and has also attended courses and programmes in various first-rate business and management schools, including Harvard Business School, IMD and INSEAD. A co-author of the book, “The Extent and Effectiveness of Bank Supervision in Nigeria”, Ahmad is married with children.

Abiru..the New CEO

Abiru is a seasoned accountant and banker and was until recently an Executive Director in First Bank. He was also the Lagos State Commissioner of Finance from 2011 to 2013. Abiru is a fellow of the Institute of Chartered Accountants of Nigeria. He is an alumnus of Harvard Business School (Advanced Management Programme) and Lagos Business School (Senior Management Programme). He holds a B.Sc (Economics) from Lagos State University and is a Fellow of The Institute of Chartered Accountants of Nigeria (ICAN) and an Honorary Senior Member of The Chartered Institute of Bankers of Nigeria (CIBN).

Tokunbo has had a distinguished career in banking spanning about 26 years, of which his early 10 years were spent in the formative years of Guaranty Trust Bank Plc. Thereafter, he spent about 14 years with the First Bank of Nigeria Limited, where he functioned as Executive Director, Corporate Banking between 2013 and 2016.

Equally, during his banking career, he was at various times between 2013-16 a Non – Executive Director in the following companies: Airtel Mobile Networks Limited; FBN Capital Limited (now FBN Merchant Bank Limited); and FBN Bank Sierra Leone Limited.

Tokunbo was the Honorable Commissioner of Finance for Lagos State Government (2011-2013), during the leadership of Governor Babatunde Fashola. He is happily married to Mrs. Feyisola Abiru, the Managing Director of Home & You Limited, a truly indigenous furniture manufacturing company, and they are blessed with children.

Reasons for CBN’s Action

The central bank had explained that it took the decision to intervene in the bank following the persistent failure of Skye Bank to meet minimum thresholds in critical prudential and adequacy ratios, which culminated in the bank’s permanent presence at the CBN lending window, its huge non-performing loans (NPLs) profile as well as its low liquidity ratio, the central bank in a proactive move effected a change in the board and management of the bank.

CBN Governor, Mr. Godwin Emefiele, said the banking sector regulator took what he described as a proactive step in order to save the health of the bank from further deteriorating.

To correct the anomalies in the bank, he said, the CBN had several meetings with the management and board of Skye bank as part of its strategy of close engagement whenever a bank’s financial or governance situation poses potential threats to the overall stability of the financial system.

However, Emefiele said 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, what they saw was the opposite in reality.

Therefore, he pointed out that given the aforementioned issues and the fact that Skye bank is a domestic Systematically Important Bank (SIB) with significant interconnectedness, the CBN would be failing in its duties if it does not take immediate action to nip the steadily declining health of the bank in the bud and correct the situation.

Furthermore, Emefiele said in view of the long grace period allowed the bank to correct the situation, the central bank came to the conclusion that, although the existing board had done its best to steer the ship, it was clear that they would be unable to bring the bank out of its present precarious situation.

“Fortunately, and in the overall interest of the bank, the chairman and some board members have decided to resign their appointments from the bank. Consequently, by virtue of the powers vested in the Governor of the CBN, we have decided to reconstitute the board and management of the bank, and appoint new members with the sole responsibility of ensuring the speedy restoration of the health of the bank.

“To this effect, the chairman of the board, all other non-executive directors, the independent director, the managing director, the deputy managing director and two longest serving executive directors have voluntarily resigned their appointments with immediate effect. In their place, we have selected industry experts and people of high integrity whom we believe can turn the bank around.

Continuing, the CBN governor pointed out that the medium-term vision of the CBN, which was unveiled in June 2014, indicated that the bank would proactively manage potential threats to financial stability, maintain zero tolerance on practices that undermine the health of financial institutions, and create a strong governance regime that is conducive for financial intermediation, innovative finance and inclusiveness.

Therefore, he said it was in furtherance of these commitments that the CBN made the changes, just as he assured the incoming board and management of the CBN’s unflinching support during this transition period. “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,” he said.

Emefiele further emphasised that, “The three most important issues in every bank are its NPL, its capital adequacy and its liquidity. What we have seen since late 2013 to 2014 is that this adequacy ratio at this bank (Skye) has been weakening and we thought it is not right for us to allow this to continue to weaken to the point where it gets to an irrecoverable situation.

“It has nothing to do with being distressed and it is important that we take it that what we are trying to say is that we do not want the ratio of this bank to worsen to a point where depositors funds get into risks. The board themselves have come to the realisation that they have tried their best and that it is about time for them to bow out so a new team can come in and run the bank to improve the position of the bank.”

He further stated that the strategic health of the banking industry remains strong, saying that when there is need to inform the general public about the strategic health of any bank, the central bank would not fail in its responsibility as a regulator.

“No doubt, as a result of global shocks, there are weakening of certain ratios, but those ratios have not weakened to a point where we would say the banking industry is distressed. We would like to appeal to all depositors to be calm. There is no need to leave an impression that any bank is distressed. No deposit is at risk.

“The CBN conducts its stress-testing of banks. We do not wait to be called to begin to talk about stress testing a bank. Stress testing is a process that is on-going in CBN,” he added.

Assurance from New Board and Management

Shortly after assumption of duty, Abiru, affirmed the CBN’s statement that the bank remained healthy and strong. He said the bank’s fundamentals remained strong and virile, assuring customers and other stakeholders of the safety of their funds and investments. The new Skye Bank boss said his team would leverage the bank’s reputable information technology platform to make it not just a frontline retail and commercial bank, but an industry leader.

Abiru, who outlined his vision for the bank, said his team would harness the expertise and skills set of the bank’s employees and the reconstituted board to take the bank to newer and higher heights.

Also, the new board assured shareholders of the bank that the new board and management team will work to increase investors’ returns on their investment. The board assured the investors that the bank would uphold sound banking practices as a way of delivering value to both the customers and shareholders as they form the core support base of the bank. In addition, the bank promised to adopt a policy of close engagement with the shareholders and other stakeholders as a path to growth and development as well as ensure that the fortunes of the bank are improved.