By Odunewu Segun
Sky Bank is said to be indebted to UBA, Africa Finance Corporation, Afrexim Bank and two others to the tune of N131.2 billion in counterparties funding.
National Daily gathered that as at Full Year (FY) 2014, Skye Bank is indebted to AFC to the tune of N17.1 billion, Afrexim Bank with N16.1 billion, and United Bank for Africa Plc, New York with N11.76 billion. In total Skye Bank owes about N131.2 billion to local and foreign borrowers with foreign loans making up 75 percent of the total.
According to an analyst with Renaissance Capital, Soji Solanke, CBN must do more to reassure counterparties on the bank’s going concern status. “Logically, we expect the CBN to provide some form of liquidity support or guarantee to keep the bank’s operations running smoothly, pending when the capital, liquidity and asset quality challenges are brought to a reasonable resolution.”
National Daily also gathered that counterparty risk is likely to crystalize if Skye Bank is unable to repay its loans putting the local banks on the line to incur severe losses.
Speaking on the implications, Solanke said an example of a counterparty risk could be UBA agreeing to repay a foreign loan obtained by Skye Bank should the latter fail to pay as and when due. “This risk is real and could be the major reason why the Central Bank has also decided not to liquidate the bank.”
On Monday, CBN took over the management of Sky Bank Plc following the bank’s inability to meet the regulator’s minimum key liquidity and capital adequacy ratios.
Skye Bank is designated as one of the eight Systemic Important Banks in Nigeria putting it right under the purview of the CBN in matters that affect the overall financial structure of Nigeria.
It will be interesting to see if these counterparties will be bailed out by the CBN or if these lenders (UBA, AFC, Commerzbank, Standard Chartered etc), are to take significant haircuts for not doing their due diligence on Skye Bank.