Defunct Skye Bank: Why We Floated Polaris Bank, NDIC

NDIC Managing Director,  Umaru Ibrahim

***Says It Saved 6000 Jobs, Secured N949.60 Billion Deposits

By CLEMENT NWOJI, Abuja

The Nigeria Deposit Insurance Corporation (NDIC), has advanced reasons why it adopted the option of floating a bridge bank (Polaris Bank Limited) in addressing the distressed defunct Skye Bank problems instead of outright liquidation, merger or acquisition.

A bridge bank is a temporary bank which is created to operate a failed bank until a buyer can be found and this was adopted in the case of Skye bank by the NDIC and Central Bank of Nigeria (CBN).

NDIC Managing Director, Umaru Ibrahim, who gave the explanations, said that the option was adopted to save over 6000 jobs, ensure continuous banking operations of 277 branches of the bank and secure access to over N949.60 billion depositors funds.

Ibrahim who was represented by the
NDIC Director, Insurance and Surveillance Department, Mohammed Umar, spoke at the workshop for Business Editors and Finance Correspondents Association of Nigeria (FICAN), organised by the Corporation in Benin City, Edo state.
The theme of the workshop is “Financial Inclusion, Consumer Protection and Evolution of Virtual currencies in Nigeria.”

According to the NDIC Managing Director, “The resolution option is less disruptive to rendition of bank services, unlike outright liquidation or depositors’ pay out.

“The pay out option for example, would have resulted in depositors not accessing their deposits as they would be paid their guaranteed deposits only, in the first instance.

“Subsequently, payment of excess uninsured deposits would remain uncertain, protracted and entirely dependent on level of realisable assets.

“However, with the bank option, depositors of the defunct Skye Bank Plc, are guaranteed access to their total deposits. Bridge Bank is also less costly to the entire macro-economy.

“With this expert arrangement, the Polaris Bank was able to guarantee the seamless and continuous banking operations in the 277 branches of the bank, over 6000 jobs were saved and depositors have unhindered access to deposits in excess of N949.60 Billy as at June, 2018.”

On the recently revoked licenses of 154 Microfinance Banks and six Primary Mortgage Banks by the CBN, the NDIC Managing Director disclosed those finance institutions were found to have had insufficient assets to meet their liabilities, just as others had their capital to risk-weighted assets ratio and regulatory capital below the minimum prescribed by the CBN.

Further, he disclosed that a number of the banks had ceased to carry on the type of banking business for which their licenses were issued for a continuous period of six months while others had gone into voluntary liquidation.

Meanwhile, he said the Corporation has commenced verification of the insured depositors, noting that majority of the MFBs depositors had less than N200,000 in their accounts which implied that NDIC would probably cover 100 Percent of the depositors.