Connect with us

Business

CBN Clarifies Capital Injection in Polaris Bank

Published

on

skye bank
  • CBN Clarifies Capital Injection in Polaris Bank

The Central Bank of Nigeria (CBN) yesterday clarified its injection of N786 billion into Polaris Bank Limited, a new commercial bank that assumed the assets and liabilities of the defunct Skye Bank.

A top official of the apex bank who spoke on condition of anonymity, said out of the above-mentioned sum, Polaris Bank would refund the N350 billion the CBN previously injected in Skye Bank when it intervened in the bank about two years ago.

Thus, the new bank would be left with N436 billion to stabilise its operations, contrary to the insinuation that a total of N1.136 trillion had been injected in the bank.

The CBN at the weekend revoked the operating licence of Skye Bank Plc exactly 27 months after it intervened in the financial institution. Also, in consultation with the Nigeria Deposit Insurance Corporation (NDIC), both regulators immediately established and licenced Polaris Bank, to assume all assets and liabilities of the defunct Skye Bank.

But the central bank source explained: “When we took over Skye Bank in 2016, we injected about N350 billion. So, from the N786 billion we are bringing in now, Polaris Bank would pay off the N350 billion that had been given to the defunct bank. So, the net injection is just about N436 billion.

“The CBN is injecting something close to capital because the money is going to be there for almost 25 to 50 years. Even though it is a loan, it is not like what was done in 2011, where the money went into a hole and it sank.

“It is not like a grant that is going to sit in CBN balance sheet as a loss. We are treating it as a loan.”

The central bank official reiterated that they took the action on the defunct bank because, “We felt that Skye Bank cannot continue to live on liquidity support from the CBN, but to inject money into the bank.”

He added: “But to do so, you must change the name so that the shareholders of the defunct bank don’t come back to say they own a bank, when the new bank starts doing well.

“The bank they owned was Skye Bank, which has been liquidated.”

Responding to a question on why the board and management of the former bank were retained in the new bank, the source said, “It was deliberate, and we don’t want to do something that is destructive.

“The CBN brought in that management team as we were trying to stabilise. The previous management and board were fired at that time. “But this new board and management has worked and cooperated with the central bank and they have tried to take the bank to a better level.

“The bank has stabilised in terms of haemorrhage. That was why we decided to coast into the new bank, Polaris Bank, with them.”

When reminded that the Asset Management Corporation of Nigeria (AMCON) which had been mandated to sell the new bank as soon as it stabilises has a sunset period, the source said: “First of all, we shouldn’t bother about time frame. Yes, some others have also said the sunset of AMCON is about 2024. If by 2024 it is not sold, whether we like it or not, it is a CBN bank presently.

“Until we have gotten value for our money, we are not going to let it go. If anybody thinks that after sinking such huge amount into the bank, the CBN would sell it to them at a very small amount, they are dreamers. If it stabilises, we would sell it to Nigerians, possibly on the stock exchange and get out our money.”

Meanwhile, the Group Managing Director/Chief Executive Officer of Polaris Bank, Mr. Adetokunbo Abiru, and the Chairman, Mr. Muhammad Ahmad, in a joint statement at the weekend, urged its customers across the country not to panic.

“All depositors shall be able to conduct their normal banking transactions in respect of such deposits at all branches previously operated by Skye Bank Plc, which branches are now being operated by Polaris Bank Limited,” the bank explained.

polaris bank

They assured customers of liquidity, saying customers “are free to withdraw all their monies without any prejudice, though should endeavour to keep faith with the bank.

“All depositors are further given notice that they are entitled to make withdrawals from their deposits either in full or in part, subject only to any security agreement existing on such deposits, as their accounts are now maintained by Polaris Bank Limited.

“Depositors are strongly encouraged to continue to maintain their deposits and normal banking relationship with Polaris Bank Limited.

“Polaris Bank Limited shall continue to pay interest on all deposits in accordance with any deposit agreement formerly existing between each depositor and Skye Bank Plc as at the date of assumption of such deposit by Polaris Bank Limited.”

Depositors Fully Protected, NDIC Insists

In a related development, the NDIC has explained that it collaborated with the CBN to carry out the bridge bank option in order to ensure that depositors in Skye Bank are fully protected.

According to the Managing Director of the corporation, Alhaji Umaru Ibrahim, customers’ deposits with Polaris Bank remain insured under the NDIC Act and the customers of Skye Bank can also continue to transact their businesses with Polaris Bank Limited, thereby ensuring the non-disruption of their banking transactions.

“The real job is that of ensuring that the bridge bank is nurtured to a point where it gets investors and is sold.

“Polaris Bank Limited, has been issued operating licence by the CBN and shall commence banking business from the 21st of September 2018; while the operating license of Skye Bank has been revoked.

By the Governor of the Central Bank of Nigeria and the NDIC has commenced the processes for its liquidation.”

He stressed that the adoption of the bridge bank model guarantees that most of the employees of that bank would not lose their jobs and would continue their employment with Polaris Bank Limited under fresh contracts of employment.

“The NDIC, as deposit Insurer, acted to ensure the continued safety of depositor’s funds in furtherance of the regulatory authorities resolve to proactively manage potential threats to financial system stability.

The NDIC hereby assures depositors and customers of the defunct Skye Bank that their deposits are safe and hereby encourages them to continue to transact their normal banking business with Polaris Bank,” Ibrahim added.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Company News

Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

Published

on

Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

Continue Reading

Business

Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

Published

on

Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

Continue Reading

Business

Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

Published

on

Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending