Skye Bank may sell some or all of its local and foreign subsidiaries as part of a review aimed at streamlining operations and boosting its capital adequacy, its chief financial officer said.
The Central Bank of Nigeria (CBN) shored up Skye Bank in July with more than N100billion naira capital injection, after sacking its top management for failing to meet minimum capital requirements. It then appointed a new management team.
Skye’s CFO Pius Olaoye said on Tuesday that the bank would sell subsidiaries if the pricing was right and has appointed advisers to help find buyers. Skye, which holds an international bank license, has three subsidiaries in West Africa and 10 non-bank subsidiaries.
“We’re looking at the various outlets that we have and some of those foreign subsidiaries are part of it. If we get good offers we will consider selling them off,” Olaoye told Reuters in a phone interview.
“If we get good offers then we’ll go ahead and spin off all of them, if not it will be selective.”
Skye’s problems started after it used short-term funds to acquire local lender Mainstreet Bank in 2014 and failed to raise fresh funds. It was in talks with shareholders and new investors last year to raise N30billion but had to suspend the plans due to weak capital markets and the exit of foreign investors as the slide in oil prices hit Nigeria’s economy and currency.
Skye shares have been hammered due to the capital failures, plunging 68 percent this year to hit a nominal value of 0.50 naira, after sliding 41 percent last year.
Olaoye said the sale of subsidiaries will boost the bank’s capital adequacy, which stood at 10.4 percent last year, compared with an industry average of 16 percent.
In addition, half of Skye’s loan book is in dollars and made to an oil industry hit by low crude prices. The fall in oil prices since mid-2014 has forced Nigerian lenders, which have long focused on loans to the energy sector, to adapt their business models at short notice.
The CBN designated Skye as one of Nigeria’s systemically important banks due to the size of total deposits it holds after it acquired Mainstreet Bank. This means it has to increase its capital ratio to 16 percent, the industry average.
Olaoye said the new management was focused on growing the bank’s retail business, cutting costs and improving asset quality.
Skye reported a loss in 2015 due to bad loans and is yet to report earnings for this year. The CFO said auditors were going through its accounts which would be reported afterwards.
