Skye Bank Goes Under In Week Its Share Price Surged 15% On NGSE

Skye Bank Goes Under In Week Its Share Price Surged 15% On NGSE

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Post Views: 415 For those who traded shares of Skye Bank Plc during the week ended Friday, September 21, 2018, it was indeed a lucky break, at least, ...

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For those who traded shares of Skye Bank Plc during the week ended Friday, September 21, 2018, it was indeed a lucky break, at least, with the benefits of hinge sight, given what we now know.
For it was in the evening of that day, the Central Bank of Nigeria (CBN announced a revocation of Skye Bank’s license, several hours after trading on the Nigerian Stock Exchange (NSE) had closed and the unlucky shareholders and those investors that sought to make quick gains from the shares could not approach the exit door, window, or even the roof-top.
While investors are left to count their loss, once again, depositors have been protected by the Nigeria Deposit Insurance Corporation (NDIC), which announced the licensing of Polaris Bank Limited, as bridge bank to cherry-pick the assets of Skye Bank and “some of the liabilities.”
CBN Governor, Godwin Emefiele, said the bank’s shareholders failed to recapitalise and ensure it continued as a going concern, and not willing to continue supplying it oxygen, or stop the haemorhage, Skye just had to be allowed to die. Its board, management and staff has since been transferred to midwife the new Polaris Bank with a N786bn war-chest that has further bloated the toxic assets already weighing down the Asset Management Corporation of Nigeria (AMCON).
Investors who started counting last week’s 14.93% capital appreciation by the shares of Skye Bank, in just one week, would perhaps be licking their wounds, as an obviously shocked NSE management, late Friday night hurriedly issued a statement suspending trading on the bank’s shares when trading on Monday.
By that time, anyway, there would be no financial institution in Nigeria, so called, given its adult baptism and rechristening as Polaris Bank Limited, a name under which it would carry on business from that Monday.
According to data by the NSE, by the CBN action, a total N10.687bn will be wiped off the bourse’s market capitalization on Monday morning, being the value of Skye Bank’s shares listed for trading.
Investors traded 2,931,537 units of Skye Bank in 47 deals on Friday, when it closed at 77 kobo per share, after gaining 4.05%.
This brought total transactions on the bank’s shares for the week to 52,486,693 shares worth N34.239m in 362 deals, making it the second most traded stock in the banking sub-sector after Guaranty Trust Bank’s 255.645m units worth N8.313bn.
The bank recently raised investors’ hope on August 14, 2018, when in a regulatory filing with the NSE, its management promised to submit its backlog of financial statements covering 2016, 2017 and half-year 2018.
Investdata New had envisaged at the time that the bank was most likely to restate its 2015 audited financials which could come worse than loss after tax of N40.726bn, published by the previous board and management accounts, as against the previous N18.717bn profit.
Skye’s problems started after it used short-term funds to buy local lender Mainstreet Bank in 2014, for which it failed to raise fresh cash. It had been in talks with shareholders and investors to raise capital but suspended plans after weak oil prices hit the capital markets and drove foreign investors away.
The CBN designated it as one of Nigeria’s systemically important banks due to the size of total deposits held after it acquired Mainstreet Bank. This meant it had to increase its capital ratio to 16 percent, the industry average.

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