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Industry Observers Say Polaris Bank is Dead on Arrival

By Dipo Olowookere

The withdrawal of the operating license of Skye Bank Plc by the Central Bank of Nigeria (CBN) late September 2018 has continued to generate reactions from experts, analysts and observers.

When the apex bank collapsed Skye Bank, it announced a bridge bank called Polaris Bank, retaining the management it appointed for the defunct lender in 2016 because it was impressed with their performance.

But some people who have chewed on the statement of the Mr Godwin Emefiele, the CBN Governor, on the establishment of the bridge bank, have described Polaris Bank “dead on arrival”.

According to Mr Emefiele, the license of Skye Bank Plc was withdrawn after noticing that despite its intervention for two years, the financial institution was still visiting the Standing Lending Facility (SLF), a window which allow banks to borrow from the CBN, as a result of liquidity challenges.

To avoid the monies of depositor going down the drain and because the bank was one of the Systemically Important Bank (SIB), the CBN decided to shut down the financial institution and name a new one using its structures, staffs and resources of Skye Bank Plc.

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Mr Emefiele was quoted on Friday, September 21, saying that ‘the existing Board, Management and Staff of the defunct Skye Bank has been retained for its good performance’.  According to him, Skye Bank Plc’s performance has improved considerably compared to the pre-July 2016 era.

However, there have been questions as to why the apex bank would revoke license of a bank with a performing management. It was understandable when the Mr Tunde Ayeni-led board was sacked by the central bank because the bank found itself in a non-performing loan mess estimated to be almost N700 billion.

The criss-cross in the statement of the CBN has thus seen questions being asked with no one ready to answer them.

There are some who said if the interim management set up by the CBN to manage Skye Bank for two years could not prevent its eventual fall, why keep the team to run the bridge bank.

Also, there are those who insist that there is more to the whole development, as they keep asking if the bank would have been put to rest if it was really doing well. There are also those who believe that the hands of the CBN Governor Emefiele might be tied, hence he is maintaining the set of management and board. Whatever is the situation, one basic truth is that Polaris Bank in the hands of the same management that couldn’t salvage Skye Bank Plc is only poised to fail except of course if the Asset Management Company of Nigeria (AMCON) can quickly find a buyer before the invested N786 billion is known.

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Explaining the consequences of the move by the apex bank, Financial Analyst, Tunde Biobaku, said “when a bank is recapitalized, there is always the need to name a new board who will handle the new investment. If you use the same set of people, they will run down the business just like they initially did to make the bank need recapitalization in the first place, so what the CBN has done is very confusing because the same guys that couldn’t do well with Skye Bank are now managing Polaris Bank, the end result is already clear, crystal clear. They would leave Polaris Bank worse than they met it, you mark my words.”

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Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), said the CBN need to explain its actions to Nigerians for better understanding.

Okezie said the investors should not be allowed to suffer again for the misdeeds and mistakes of the regulations. He called on the Federal Government to investigate the incessant fall of banks in the country, adding that the past management and board of Skye Bank must be made to account of what led to the the bank’s misfortune.

Signs that the apex bank would move in to takeover the bank became obvious when it failed to declare its result under the mandatory window. The announcement of the takeover by CBN came like a surprise to many.

With the same old wine in a new bottle, it is hard to see a flourishing Polaris Bank in the near future, especially in the hands of Tokunbo Abiru, leader of the team.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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