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Board, Management Sack: Again Industry Watchers Question How Skye Bank Acquired Mainstreet Bank




In light with recent developments in Skye Bank Plc, questions as to how the financial institution was liquid enough to acquire Mainstreet Bank are currently being asked.

Skye Bank Plc acquired Mainstreet Bank Limited in 2015, amidst speculations and allegations that it was basically a paper work transaction without cash involvement.

Although the bank was quoted as saying that it acquired Mainstreet Bank Limited having paid N100b, many doubted this.

The doubts was fueled more when an article by Proshare titled “How to buy a Nigerian bank with no money surfaced making serious allegation.

In the article, Proshare, is quoted as saying that the acquisition of Mainstreet Bank Limited was not a transparent one.

The writer of the article is quoted saying thus “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.

The Central Bank of Nigeria (CBN), sacked the management and board of Skye Bank Plc, on Thursday, July 7, citing its insider lender and a growing non-performing loan (NPL), which had eroded its capital and liquidity ratios as reason.

The situation however didn’t start the day before yesterday, as Industry Watchers have been suspecting there was something amiss for a while.

Indication that all was not well with the financial institution came to fore when the bank issued a profit warning in the first quarter of 2016 and still failed to release its full year 2015 results before the end of second quarter of 2016.

As if that was not bad enough, the concern of Industry Watch pitched higher when Skye Bank made repeated forays to the central bank’s discount window (lending opportunity) after the central bank sucked out N1.3 trillion from the banking system through the Secondary Market Intervention Sales (SMIS) in the interbank forex market.

Industry watchers are now asking how a bank with such challenges acquired Mainstreet Bank Limited.


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