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Skye Bank takeover: A journey from Afribank to Polaris Bank

THE Central Bank of Nigeria (CBN) announced on Friday that it has taken over the Skye Bank over the inability of the bank to meet its banking obligations.

CBN said the bank has been under stress since 2016 and the shareholders of the bank had failed to recapitalise it.

To protect the customers of the bank, CBN established a bridge bank, Polaris Bank, to assume the assets and liabilities of Skye Bank. “The strategy is for the Asset Management Company of Nigeria (AMCON) to capitalise the bridge bank and begin the process of sourcing investors to buy out AMCON [Polaris Bank],” said Godwin Emefiele, the CBN governor.

As CBN revoked the licence of Skye Bank, it assured the customers of the bank that their deposits are safe and normal banking services will continue on Monday under the new name.

This exact scenario played out in 2011 when the CBN revoked the licence of Afribank and a bride bank, Mainstreet Bank took over the operation of the bank.

Afribank survived the banking consolidation of 2005 when 89 commercial banks in the country were required to recapitalise with N25 billion. Most of the banks were merged or acquired. At the end, 25 banks emerged successfully after the consolidation.

Afribank was established by French investors in 1959, just a year before Nigeria’s Independence from Britain. The bank retained its name until 2011 that its licence was revoked by the CBN over the similar challenges that Skye Bank faced.

Mainstreet Bank, the bridge bank that took over Afribank under AMCON, was sold to Skye Bank in 2014. And in 2016, just two years after acquiring Mainstreet Bank, Skye Bank started failing to meets its minimum thresholds in liquidity.

Five legacy banks merged in 2005 to form the Skye Bank. The banks were Prudent Bank, EIB International, Bond Bank, Reliance Bank, and Co-operative Bank.

Just like the way AMCON acquired the assets and liabilities of Afribank in 2011, customers of Skye Bank may not have to worry about their deposits. Afribank customers did not lose their deposits but continued banking from Mainstreet Bank to Syke Bank.

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