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‘Revocation of Skye Bank’s licence’ll erode investor confidence’

‘Revocation of Skye Bank’s licence’ll erode investor confidence’

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Chiwendu Obienyi

Financial and investment experts have warned that the revocation of banking licence of Skye Bank Plc by the Central Bank of Nigeria (CBN), could further erode the confidence of investors in the nations capital market.

Their observation came after the CBN on Friday revoked the operating licence of the bank, saying the decision was premised on the inability of the owners of the bank to shore up its capital after it received a N350 billion intervention in July 2016.

Disclosing the announcement at a press briefing in Lagos, Governor, CBN, Godwin Emefiele, said a bridge bank known as Polaris Bank had been created to assume the assets and liabilities of the defunct bank.

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He said, “Skye Bank required urgent re-capitalisation as it can no longer continue to live on borrowed times with indefinite liquidity support from the CBN. We have decided to establish a bridge bank, Polaris Bank, to assume the assets and liabilities of Skye Bank. The strategy is for AMCON to capitalise the bridge bank and begin the process of sourcing investors to buy out AMCON. By this decision, the licence of Skye Bank is hereby revoked.”

Commenting on the development, Chief Executive Officer, Sofunix Investment and Communications, Sola Oni, described the development as a sad commentary and capable of further putting investor confidence in a quandary.

According to him, the Nigerian Stock Exchange’s corporate action of trading suspension on the defunct Skye Bank’s shares is consistent with its investor protection obligation as a Self Regulatory Organisation (SRO).

“The apex bank’s rescue technique through Polaris Bank tilts more in favour of depositors. What is the fate of the real owners, the equity holders? Although shareholders take the highest risk and in good time, highest return, action must be expedited to attract strategic investors in order to bring the bank on the track. This is the only way the shareholders can heave a sigh of relief,” Oni noted.

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Corroborating, National President, Constance Shareholders’ Association of Nigeria, Mallam Shehu Mikail, argued that the action taken by the CBN on the bank is tantamount to a system of mafias against voiceless retail shareholders.

He said, “This action will erode the confidence of an investor into our capital market at which it may likely collapse our economy because it is the same regulators that appointed the interim board and management since 2016 till date and extended their tenure for next two years without them even calling for a meeting with shareholders to brief us of their stewardship till date

Now CBN is saying the bank need recapitalization, have they ever asked shareholders? No, and as at the close of market today the stocks were traded. What kind of regulation is this in Nigeria where an action can be taken without due process? This goes to show we don’t have a government capable of protecting the economy”

The post ‘Revocation of Skye Bank’s licence’ll erode investor confidence’ appeared first on The Sun Nigeria.

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