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Skye Bank to shore up capital by N50bn

By Peter Egwuatu &  Micheal Eboh

Skye Bank Plc has announced plans to shore up its capital by N50 billion within the next two years , just as it pledged to cut down drastically its expenses and boost its income and profitability in the years ahead.

The Bank stressed that it will shore up its capital base by N50 billion either through bond issuance programme, public offer, private placement or other means as approved by its shareholders.

Speaking at a pre Annual General Meeting (AGM) press briefing in Lagos, Managing Director of the Bank, Mr. Kehinde Durosinmi-Etti, said “ to achieve this the bank intends to enter into a joint venture agreement with a number of banks in the country in delivering certain services to its customers, with the aim of driving down its operational costs, thereby ensuring a reduction in its cost-to-income ratio to between 50% to 55% over the next three years, from about 67 per cent recorded in 2010.

Other measures to be adopted, according to Durosinmi-Etti, include aggressively growing its income while reducing expenses and cost.

strategic approach to deposits. We will take steps to reduce fixed deposits due to its high cost nature on the bank, while we will take deposits on a need-to basis, as there would be no need to gather deposits if we are not increasing loans,” he said. He further stated that the bank’s Non-Performing Loans (NPL) will be reduced to five per cent at the end of 2011, thanks to the activities of the Asset Management Company of Nigeria (AMCON).

Speaking on the planned capital raising exercise, Durosinmi-Etti explained that the decision to increase its capital base was borne out of the need to take advantage of the numerous opportunities it identified in various segments of the Nigerian economy.

He said, “The additional capital will help the bank to deepen its share of the market in strategic sectors such as agriculture, manufacturing, oil and gas, power, telecoms and infrastructure among others, where opportunities for growth have been identified, in line with our new business focus. It will also help the bank diversify its capital, and further improve its capital adequacy. “

He stated that the Bank is set to ensure liquidity in its Real Estate Investment Trust Scheme (REITS), the Skye Shelter Fund, as it has applied to the Securities and Exchange Commission (SEC) and other relevant regulatory authorities to restructure the fund, bringing down the price to about N10 per unit, thereby, increasing the total issued units.

Durosinmi-Etti further assured its shareholders that the Bank does not intend to merge with another bank and that it is not up for acquisition by another bank.

“The Bank,” he said, “will seek to focus on critical issues, including strengthening risk management structures, low cost deposit mobilisation, appropriate product pricing, vital and beneficial investments, improved governance practices, and absolute commitment to enhanced efficiency and employee productivity, as we look forward to another promising year.”


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