Monday, September 24, 2018 11:59 AM / Proshare Research
The action of the Central Bank of Nigeria (CBN) on Friday, September 21, 2018 to revoke the license of Skye Bank Limited and to transfer all assets and liabilities of the limited liability company to an entity described as Polaris Bank Limited (as described in the CBN governors’ press release – see point 6) has attracted both interest and intrigue from market analyst and the financial engaging public.
It is therefore a welcome development to see the NSE management and Council acting on a matter it had sought to act upon earlier on August 24, 2018; when it wrote a letter to the bank stating that:
“….due to the delay in filing of the .. financial returns by the Bank with The Exchange, various stakeholders in the Nigerian Capital Market are now questioning the credibility of The Exchange for not suspending the Bank alongside other companies who failed to file their financial statements within the period prescribed by The Exchange’s rules. Consequently, because of the need for The Exchange to protect the investing public and provide a fair and efficient capital market, the shares of Unity Bank Plc will be placed on suspension on Wednesday, 29 August 2018, if the financials are not filed before close of business on Tuesday, 28 August 2018.”
This financial were not provided because the Central Bank of Nigeria (CBN) represented on August 28, 2018 as follows (excerpt):
Apparently, the governance issues raised in singular must be looked at in a plural tense to fully understand the both the context and construct of how the governance architecture in Nigeria works. This episode provides a glaring indication that all may not ‘always’ be as it is presented.
We recognise that interventions have to be guarded and well managed and our coverage of the matter thus far and indeed on the subject of governance in the financial system, leads us to raise issues around conduct – practice, process and positions taken.
Given that the CBN had always had control of Skye Bank Plc over the lats two years, and working of the template of how such transitions to a bridge bank had taken place – the questions/concerns arising therefrom was therefore focussed, viz:
It is the last point we would like to start from. We will leave out the SEC rules for now for a future commentary but will focus on process issues that goes to the heart of governance processes…
Apparently, the governance issues raised by the CBN (while self-indicting) in a singular tense must be looked at in a plural tense to fully understand both the context and construct of how the governance architecture in Nigeria financial system(s) works as this episode provides;
We must and do recognise that interventions have to be guarded and well managed and our coverage of the matter thus far and indeed on the subject of governance in the financial system, leads us to raise issues around conduct – practice, process and positions taken.
The establishment of the new Polaris Bank Limited set up to serve as a bridge bank to take over the assets and liabilities of the defunct Skye Bank Plc. As registered as business name/company with the Corporate Affairs Commission (CAC) as a pre-requisite to take-off of any company within the Nigerian jurisdiction as at the Friday, when the announcement was made was not a duly registered entity in law. See below:
Our engagement with parties and regulators must have influenced the decision to make changes leading to this new status at the time of this report:
That said, what will the CAC do or act in respect of two applications for the same name. Will the CAC be happy to release today, the applications made for this and when it took a decision on both?
Second, where is the license given by the CBN for the new bank and when was it dated?
Technically therefore, the licence for Polaris Limited to function as a bank was granted today, as the only business name / company called ‘Polaris Limited’ found (as all due diligence inclined entities should do) found to have been fully registered with the commission as at the day the CBN revoked the licence of Skye Bank Plc is as described above.
While this may just be an episode and not the end-game; the process leaves much to be desired given the unanswered questions raised above.
We retain our role to monitor the eventual conclusion to this episode as a value-proposition for what we stand for and will be happy to take questions thereof/in via firstname.lastname@example.org
We received a copy of the CoI this morning and we publish here below for completeness of information on the subject.
1. NSE Suspends Trading on Skye Bank Shares – Sept 24, 2018
3. Skye Bank Plc: Has CBN Finally Completes The Undertaker’s Role? – Sept 21, 2018
5. The History of Nationalised Banks Sept 21, 2018
7. Skye Bank Plc: One Year After CBN Takeover – Aug 07, 2017
8. – May 10, 2015