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Friday, September 21, 2018 16:50 PM / Proshare Research
The current situation of Skye Bank Plc remained one that is not new to us and has been foretold before now.
When
the news of Skye Bank Plc emerged as the preferred bidder for Mainstreet Bank
hits the market and other stakeholders, our commentary titled ‘The
Surprising New Math of Acquisition of Banks in Nigeria – The Skye Bank Case’
published on Thursday October 24, 2014 did justice to this by pointing out how
Skye Bank capital position does not supports its bid.
Even Fidelity Bank Plc as the second preferred bidder was considered to
be well positioned to finance its bid considering its Tier 1 and Tier 2 capital
position as at that period.
That said, Skye Bank paid the mandatory
20% of its bid price following its announcement as the preferred bidder and
eventually paid successfully the due balance of 80% before the November 3rd,
2014 deadline set by AMCON. More updates on the funding sources of Skye Bank
Plc acquisition of Mainstreet Bank can be found here ‘Skye
Bank - The Math Adds Up says CBN, Acquisition Payment of Mainstreet Bank Done’
On
May 10, 2015 our published follow-up article titled ‘How
to Buy a Nigerian Bank With No Money’,
to the earlier commentaries stated thus:
“When
the amount bided by Skye Bank for Mainstreet Bank was announced, the market
took a pause. The math appeared unclear based on publicly available records and
the most recent returns rendered. Skye Bank Plc with a market capitalization of
less than N40 billion was announced to have agreed to pay N126 billion for
Mainstreet Bank. With that amount, Skye Bank could have bought FCMB and Wema
Bank or Sterling Bank and Wema Bank, while offering good premiums to each
bank’s shareholders. So why pay so much for Mainstreet Bank? Is there something
about the bank that the market missed, players wondered.
Despite
talks about a possible sweetheart deal, the professional advisers engaged by
AMCON represented that the bid met their mandate and true enough; it was the job
of the Central Bank of Nigeria (CBN) to state otherwise.
To
fund the transaction, Skye Bank Plc first instituted a N30 billion Commercial
Paper program to pay the deposit for the transaction. It then obtained a bridge
financing of N100 billion from four banks. The bridge financing was backed
using Mainstreet Bank’s AMCON Bonds that were due for redemption shortly after
the closing of the transaction.
Most
will consider this an act of financial ingenuity, yet it remains a classic case
of in-and-out i.e. Skye Bank Plc borrows money from banks, pays AMCON, AMCON
redeems Mainstreet Bank’s AMCON Bonds and Skye Bank (who now owns Mainstreet
Bank) takes the cash to pay the four banks back.”
This and earlier articles published pointed to the fact that there was
an imminent danger/crisis if the Skye Bank acquisition of Mainstreet Bank was
allowed to go through. It was a disaster waiting to unfold.
Thus when the CBN action of July 04, 2016 announcing the sack of top
executives of the bank over capital adequacy issue occurred less than two years
after granting the approval for the bank to acquire Mainstreet Bank; it
justified the foretold commentaries.
With
the CBN
revoking Skye Bank’s operating licence and asking AMCON to capitalise the
established Bridge Bank, CBN is
eventually taking a decision that was long overdue and even at this, it should
not be credited for the action but take responsibility for other actions needed
in the market.
By nationalising Skye Bank Plc, it can be said that the regulator has
performed and completed an undertakers’ role in Skye Bank considering the fact
that the bank has been under its management since it took it over in July 2016.
Related News
1. CBN Revokes Skye Bank’s
Operating Licence, AMCON to Capitalise the Established Bridge Bank
Sept 21, 2018
2. The History of Nationalised
Banks Sept 21, 2018
3. Skye
Bank Announces Delay in Filing of Q2 Financial Statements
4. CBN
Renews The Mandate Of Skye Bank Board of Directors
5. Skye
Bank Plc Announces Details of Shareholder with 5pct and Above Stake
6. Skye
Bank launches #SkyeXperience to boost seamless banking service
7. Skye
Bank Plc Denies Concealing TSA Funds
8. Skye
Bank Plc: One Year After CBN Takeover
9.
We
have Stabilized Skye Bank, Recovers N60billion from Debtors – Tokunbo Abiru
10. How to Buy a Nigerian bank with no money
11. The Surprising
New Math of Acquisition of Banks in Nigeria – The Skye Bank Case
12. Reworking the
Acquisition Maths of Mainstreet Bank by Skye Bank Plc
13. Why investors should expect a contained earning from Skye Bank
14. Skye Bank - The Math Adds Up says CBN, Acquisition Payment of Mainstreet
Bank Done – Nov 01, 2014
15.
Tracking Skye
bank's Share Price: 25days After
16. Skye Bank Plc
Seeks Extension to file its Interim Financial Statements for Q1 and Q2 2016
17.
All Round
Pressure Sinks Skye Bank FY’15 Earnings
18. Skye Bank Plc
Reports Q4 2015 Results; Further Deterioration Expected in Q1 and Q2
19.
SKYEBANK Declares N40.73bn Loss in
2015 Audited Results SP N0.70k
20. Tracking Skye
bank’s Share Price: 15days After
21. Tracking Skye bank’s Share Price: 10days After
22. CBN Affirms Confidence in Skye Bank, Institutes Guarantee Line
23. Tracking Skye bank's Share Price: 5days After
24. Nigeria's Skye Bank Downgraded To 'CCC-' On Heightened Default Risk
25. Nigeria’s Central Bank Takes Over Skye Bank - Sacks Board Over Capital
Issues
26. Expectedly, S&P rates Skyebank a CCC+ on back of Economic &
Liquidity Concerns
27. Skyebank and The Prolonged Delay on Earnings Announcement
28. CBN Reduces maximum limit of FX borrowing to 75% of
Capital
29. Skye Bank Plc and AMCON Sign Agreement on Acquisition .-
Proshare
30. SKYEBANK Seeks Four-Week Extension to File its 2015 Audited Financial
Statement
31. SKYEBANK Issues Earnings Guidance for Financial Year Ended 31st December
2015
32. All eyes still on Skye Bank s capital raise
33. Years After
-Scorecard: One Year after Change of CEO at Zenith, UBA & Skye
34. Years After -
CBN’s Intervention in Banks: One Year After
35. Years After
-Emefiele's CBN: one year after
36. Skye Bank Plc
Notifies on the Late Release of 2016 Audited Financial Statements
37. Skye Bank Plc to
file 2016 Audited Financial Statements on or before 12th May, 2017
38. Skye Bank Plc
Announces the Resignation of some Executive Directors
39. Skye Bank Ratings Suspended Due To Lack of Sufficient Information
40. Skye Bank Plc
Receives Regulatory Approval to Postpone AGM
41. Skye Bank is
Neither Distressed Nor Liquidated - CBN
42. Skye Bank Plc
Appoints Babatunde Osibodu as General Counsel
43. AMCON Acquires
Bridge Banks – Press Statement - Proshare Aug 06, 2011
44. Q&A on Nationalisation of Banks by the CBN - Proshare Sept 02, 2011
45. Court halts planned
sale of Bank PHB by CBN - Proshare Mar 16,
2011
46. Bank PHB
Internal Memo Reveals worsening Financial Condition Mar 29, 2011
47. Nationalised
Banks and the fate of shareholders - Proshare
48. CBN's
Intervention in Banks: One Year After - Proshare Oct 08,
2010
49. [PDF] SEC, Udo Udoma
& Corporate Governance: The Fact Files - Proshare
Feb 18, 2010
50. The Bull in the
China Shop – A New Paradigm in the Nigerian Financial Markets. Aug 21,
2009
51. [PDF] The Bull in the
China Shop - Proshare
52. [PDF] The Market
Memorandum - 060910 - Proshare Sept 06, 2009
53. Analyst Report
on Skye Bank - 2008