After four months of managing to keep the ship afloat, the management of Skye Bank Nigeria have finally decided to sell off its West African branches.
The sell off move is expected to bring in some serious cash into the coffers of the bank in order to bolster its capital base and by extension its ‘below-benchmark’ capital adequacy ratio which necessitated its takeover by the Central Bank of Nigeria in July.
It would be recalled that the Central Bank of Nigeria, had replaced all the management and board of Skye Bank after the bank almost collapsed due to its nearly-zero working capital ratio.
As part of the plan, Skye Bank plans to sell majority stake in its Sierra Leone, Guinea and Gambia branches. According to Bloomberg reports who quoted anonymous sources, the bank is looking at making the deal private perhaps to avoid negative sentiments from the investor community and its customers who might misconstrued the move as a sign of another turbulence.
According to people with the knowledge of the matter, Greenwich Trust Limited has been hired by the bank as its financial adviser on deal. Sources noted that expressions of interest for these assets will close by the 18th of November, 2016.
By so doing, Skye Bank will no longer be an international bank but will now apply for a national banking license. This is expected to remove the pressure on its system by ‘maintaining its cool’ with a 10% CAR required for a national bank as opposed to 15% CAR required for an international bank.
Analysts virtually agree that the bank is doing the right thing. Selling off these assets will not only generate additional capital for the bank but would further allow it to run an efficient and lean organisation that can get back into profitability.
This year, Nigerian banks had the worst third quarter ever since the 2008 financial crisis. Third quarter results for the year showed that only Access Bank PLC and GTBank PLC had impressive results. Others posted huge losses and minimal net profits.