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Skye Bank: Is this the evolution of Nigeria’s newest megabank?

By Moses Nosike

Durosinmi-Etti, GMD, Skye Bank
Durosinmi-Etti, GMD, Skye Bank

It is no longer news that Skye bank recently acquired Mainstreet Bank, formerly Afri Bank of Nigeria. What is news is whether this is going to be Nigeria’s newest mega bank.? It was late literary giant, Prof Chinua Achebe that stated in his novel, Things Fall Apart that a chick that will grow into a cock will be spotted the very day it was hatched.

The question now is, is this popular saying coming true in Nigeria’s banking sector with Skye Bank’s acquisition of MainstreetBank.? Which is set to help it grow into one of the top five banks in Nigeria. As presently constituted, Skye Bank is a product of five banks that merged, as a result of the banking reforms engineered by former Central Bank of Nigeria, CBN, Governor, Chukwuma Soludo in 2006.

Interestingly, the merging units had to amicably resolve to prune to five to ensure seamless business combination, sustained strength and guaranteed returns to stakeholders, including investors, customers and employees. According to information at the bank’s website, the bank has a cumulative wealth of experience spanning over 50 years, which historically makes the bank, one of Nigeria’s oldest banking institutions.

The major strengths of the bank include its diverse ownership structure, quality management and staff, prudent financial management and strong reputation on service delivery. To this, the bank has added size by the acquisition of Mainstreet Bank, which sees it spring to being ranked among the top five banks in Nigeria by branches.

Even before acquiring Mainstreet Bank in late 2014, the bank was quoted on the Nigerian Stock Exchange, NSE with a shareholder list of over 450,000 names, made up of individual and corporate investors. This, industry analysts are quick to point out, is a vote of confidence by the investing public in the banking institution.

One of the striking things about the ownership structure of the bank, unlike some of its competitors is that, the shareholding structure puts no more than five per cent in the control of any one individual or company. This fact ensures that, the bank is scientifically managed devoid of any external influence or pressure from ownership. The enterprise is devoid of investors’ influence which leaves it wholly to professional management.

At home with mergers:

The recent history of the bank shows that, in 2006, Prudent Merchant Bank Limited merged with four other banks to become Skye Bank Plc. The four other constituent banks were; EIB International Bank Plc., Bond Bank Limited, Reliance Bank Limited and Co-operative Bank Plc. To the credit of the management of the bank at its take-off, that seamless consolidation exercise soon saw the bank evolve into one of the top financial institutions in the country.

That high score, analysts posited is set to count in favour of the bank as it takes this bold step to leapfrog contemporaries from being a tier two bank to one of the top five banks in Nigeria by number of branches.

The bank signaled its intent shortly after the consolidation in 2006, when in the first nine months of the exercise Skye Bank posted profits of 2.5 billion naira. By the end of the same period in 2007, the bank’s management, led by then Chief Executive Officer and Managing Director, Akinsola Akinfemiwa, was also able to more than double the figure to 5.5 billion naira. This reinforced the belief of the investing public in the management of the bank.

Analysts point out that, the result could only have been achieved because the bank’s proactive experienced management team put in lots of hard work and dedication to offering customers the innovative products necessary to improve their lives and their financial situations.

Given the strong investor base garnered from the acquisition which actively supports its investments and strategies, Skye Bank having identified the Shipping and Real estate sector as a growing market that offer excellent opportunities for profit, introduced the first Real Estate Investment Trust unit (REIT) to be listed on the Nigerian Stock Exchange, helping investors benefit from growth throughout the market while at the same time reducing their investment risks.

How the new Megabank is likely to evolve

Building on the solid foundation of the regulator induced consolidation supervised by two central bank governors Soludo and Sanusi Lamido Sanusi now the Emir of Kano, forward looking banks have moved to strengthen proactively.

Consistency in prudent management has seen Skye Bank continue in steady growth to the point that, Central Bank of Nigeria classified the leading tier two bank among eight banks strategically designated as ‘Systemically Important Banks.’ This accolade is an eloquent testimony to Skye bank’s industry leadership, strong market share, diverse location spread and strong brand equity.

In a statement to the media in October 2014, Head, Corporate Communications Strategy at AMCON, Kayode Lambo announced Skye Bank as the preferred bidder for the acquisition of the entire issued and fully paid-up ordinary shares of Mainstreet Bank Limited. Skye Bank emerged the preferred bidder after a rigorous bidding exercise that spanned five months with over 20 bidders in contention.

According to Lambo, Skye Bank’s purchase of Mainstreet Bank was subject to fulfilment of conditions set out in the Share Sale and Purchase Agreement (SPA) which among other things set limited days for payment for the transaction as well regulatory approvals from the CBN and SEC.


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