See the people responsible for Skye Bank’s downfall, says NDIC boss | As Skye bank changes name to Polaris Bank

Former Skye bank (now defunct) Chief Executive Officer (CEO), Mr Tunde Ayeni is currently been investigated along with one other executive, Dr Festus Fadeyi as the bank’s operational license was recently revoked by the Central Bank of Nigeria (CBN)

The news came as the CBN recently  signed an MoU with other African nations that have Nigerian banks in operation so as to safeguard the host countries as revealed by the Managing Director and Chief Executive Officer (MD/CEO) of the Nigerian Deposit Insurance Corporation, Mr Umaru Ibrahim at the International Association of Deposit Insurers (IADI), Africa Regional Committee (ARC) workshop in Lagos on Wednesday, September 26 2018, .

It was reported that Mr Tunde Ayeni and Mr Festus Fadeyi borrowed huge amount of loans form the bank. This huge loans caused the bank to collapse and as a result were taken over by the Central Bank of Nigeria about two years ago. Skye Bank’s operational license was however revoked on Friday September 21, 2018 while all its assets and liabilities were taken over by Polaris Bank Limited.

The record from the last financial audit report shows that Mr Tunde Ayeni and Dr. Festus Fadeyi had borrowed heavily from Skye Bank Plc. Allegedly, it was reported that Mr Tunde Ayeni and his business partners had taken huge loans from Skye Bank to fund their acquisitions of the Ibadan Electricity Distribution Company (IBEDC), and Yola Electricity Distribution Company; Ascot Offshore Nigeria Limited -an energy services company; and NITEL/MTel.

Dr. Fesus Fadeyi was also reported to have taken huge loans through a company called Pan Ocean, to fund the company’s oil and gas upstream projects, which was said to be one of Skye Bank’s major and biggest non performing loans.

While commenting on the board members who were responsible for Skye Bank’s downfall, the MD/CEO of Nigerian Deposit Insurance Corporation (NDIC), Mr. Umaru Ibrahim said:

“They are being investigated and I can assure you that when the time comes, the necessary security and law enforcement agencies would do their work.”

Mr Umaru Ibrahim also commented on the recent developments with respect to cross border collaborations where he mentioned that the Central Bank of Nigeria (CBN) had signed a Memorandum of Understanding (MoU) with other African countries here Nigerian Banks are located and in operation. Mr Umaru Ibrahim said:

“There are many Nigerian banks that are operating in other parts of Africa and other parts of the world and that calls for collaboration and at various jurisdictions. CBN for instance has signed MoUs with the bank of Ghana, Sierra Leone and wherever our banks are so that in case of failure of a branch of a Nigerian bank a particular country outside Nigeria there can be a collaboration so as to ensure that the depositors of those host countries do not suffer.”

During his speech at the the International Association of Deposit Insurers (IADI), Africa Regional Committee (ARC) workshop in Lagos on Wednesday, the Nigerian Deposit Insurance Corporation boss, Mr Umaru Ibrahim said:

“The fabric of the global financial stability is constantly being threatened by one form of crisis or the other. The potential threats in recent times and currently, include monetary policy normalization in some notable economies which may result into sharp volatility and disruptions in financial markets; another issue is the partial dis-intermediation of the banking system arising from proliferation of digital currency, such as Bitcoin, as well as the activities of FinTech in general.”

“The latter has the tendency to jeopardize the efficacy of safety-net arrangement and prudential roles of the traditional banking system, such that this function becomes available to a smaller segment of the banking system. Growing risk of protectionism and ongoing trade wars between the United States and the rest-of-the-world China, North America, and Europe could degenerate, with negative implications for the global financial system stability. Rising exposure of emerging market to reversal of foreign portfolio inflows and US Dollar appreciation also constitute risks to the global Financial system stability.”

“The aforementioned issues present potent downside risks to achieving financial stability and precursors to redesigning broad-based financial systems’ policies. How prepared are we as regulators and supervisors in managing a systemic financial crisis should they occur. Increasing financial interconnectedness has shown that banking crisis can have a contagious effects. A system-wide approach to crisis management, involving collaborative efforts of financial safety-net participants and regional deposit insurance systems is therefore imperative. I am optimistic that at the end of this Workshop, strategies for system-wide crisis preparedness and resolution options in promoting financial stability in the region would emerge.”

According to Mr Umaru, NDIC has adopted various different financial resolution mechanisms in resolving the the failures of distressed deposit-taking finacial institutions in Nigeria. He said:

“The failure resolution mechanisms used by the corporation include: deposit pay-out, purchase and assumption, open bank assistance, assisted mergers, and bridge bank. Through these failure resolution mechanisms, the NDIC had so far closed 52 deposit money banks (DMBs), out of which 49 are currently in liquidation while the remaining are involved in litigation challenging the revocation of their licence by the Central Bank. In the case of other deposit-taking financial institutions, a total of 187 micro-finance banks (MFBs) and 42 primary mortgage banks (PMBs) are currently in liquidation.”

We wish Polaris Bank and all its customers a good one for the future.

 

 

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