An Appraisal of the Central Bank of Nigeria’s Approach to Resolution of Skye Bank Plc

On 21 September 2018, the Central Bank of Nigeria (CBN) revoked the banking licence of Skye Bank Plc on the ground that it was significantly undercapitalised. The CBN also claimed that Skye Bank’s shareholders were unable to recapitalise the bank. CBN’s first regulatory intervention in Skye Bank was on 4 July 2016 when the CBN replaced some board members and injected N350 billion into the bank.<br><br>Polaris Bank Ltd (a bridge bank) has been established to take over the assets and liabilities of Skye Bank. The CBN and the Nigerian Deposit Insurance Corporation (NDIC) have turned over Polaris Bank to the Asset Management Corporation of Nigeria (AMCON). AMCON has injected N786 billion into Polaris Bank and is expected to source for a credible investor.<br><br>This write-up examines Skye Bank’s resolution and key issues arising therefrom such as the special insolvency regime for banks, the bridge bank approach, bail-outs and bail-ins, the too-big-to-fail principle and moral hazard, and the treatment of Skye Bank’s shareholders.<br><br>