LAGOS: Nigeria's central bank has provided a short-term loan to Skye Bank to help to stabilise its operations after it replaced top executives for failing to meet minimum capital requirements.
The central bank has been seeking to contain growing problems at Nigerian banks where profits have been falling and bad loans rising due to a heavy exposure to the oil industry and a weak economy due to low oil prices.
"We provide a short-term facility to help them manage the panic withdrawal that happened," central bank spokesman Isaac Okorafor said. Depositors had rushed to withdraw money after Skye Bank's bosses were replaced. "In order to support the new management we decided to give them some money, just to support them," he said. Okorafor did not disclose how much money was granted to Skye.
The central bank had decided to replace Skye's senior executives two weeks ago. It subsequently appointed Tokunbo Abiru from rival First Bank to head Lagos-based Skye Bank, the country's eighth-largest bank. Nigeria's central bank has powers to remove bank executives and used them during the 2008/2009 global financial crisis when it sacked nine CEOs at banks which were undercapitalised.
Skye became one of the country's systemically important banks according to the central bank after it bought Mainstreet Bank in 2014 requiring it to hold more capital.
The central bank has said Skye is able to meet its obligations and that it will provide support until the new management can bring in fresh funds.
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