Skye Bank allays fear over share reconstruction

FELIX OLOYEDE |

The Group Managing Director, Skye Bank Plc, Timothy Oguntayo, has stated that the bank has no immediate plans to reconstruct its shares, following the insinuation by shareholders that the bank may reconstruct its shares after acquiring Mainstreet bank.  However, Oguntayo said that the bank would not do so during the bank’s 2014 Annual General Meeting held in Lagos yesterday.

The bank boss argued that Skye Bank is not presently overcapitalized,  so, there was no need to reconstruct its shares, adding that it is one  of the least capitalized deposit money banks (DMBs) in the country.

Mr. Oguntayo also assuaged the fear that the bank is over exposed to  the oil and gas sector, saying that Skye Bank has only 19.7 per cent  exposure in the petroleum industry.

He said the bank’s profit before and after tax was N10.47 billion and  N9.74 billion respectively, against the N19.65 billion and 18 billion  it recorded the previous year, attributing its lower level of profitability to loan impairment charge, administration and general expenses.

“The restrictive monetary policy stance of the CBN aimed at  maintaining price stability, especially in the exchange market, had  adverse effects on the short-term performance of the banking industry.

This was further exacerbated by the year rapid decline in the oil  price in the second half of the year and a significant repatriation of  funds by foreign investors,” he further explained.

In the year under review, the bank had a marginal growth of 1.1 per  cent, “Which reflected a mixed bag of higher income interest following  pass-through pricing effect on the borrowing customers but lower fees  and commission owing to regulatory reduction in certain income items,” Mr. Oguntayo said.

The National Coordinator, Shareholders Association of Nigeria, Sir  Sonny Nwosu, complained about the expansion of Skye Bank board of  directors to 18, saying it is becoming too large.

He advised the board of the bank to watch it as this may impact on its revenue.

Meanwhile, he was not pleased with the bank giving its shareholders a bonus of one ordinary share for every 20 share they hold.  “Nigerian shareholders had in the past kicked against a bonus of one

ordinary share for every 10 share, why is the Skye Bank now giving us  one for 20 share bonus?” he queried.

The bank’s shareholders held divergent views about its investments in bonds. While some of them were uncomfortable with Skye Bank investing in the bonds of 10 state governments, others saw it as a wise venture.   Sir Nwosu is one of those who commended the management of the bank for

investing in bonds, saying once these were insure there was no cause for alarm.

But Olorun J.K. Anunu wants the bank to be careful with the  investments it makes in state bonds.

The shareholders were also critical of the penalty the bank paid to  the CBN, saying the member of the management responsible for the fault  that attracted the penalty should be made to pay it in future.

Another issue that divided the shareholder was the plan of the bank to  raise N30 billion from the capital market in the third quarter of  2015.

Some shareholders were of the opinion that the timing for the  recapitalization was not appropriate, arguing that Skye just make a  huge investment through the acquisition of Mainstreet Bank that

raising funds through issue may lead to reconstruction of the bank’s  shares.

But Mr. Nona Owoh held a different view, saying it is better for the  bank to approach the capital market now as more than 50 companies were  already queuing to raise funds from the market.

He set a N14 billion profit target for the management of Skye Bank,  threatening the shareholders would vote against the directors at the  next Annual General Meeting if they fail to meet this target.

Mr. Owoh expressed displeasure over the N330 million the bank paid to  the CBN for promoting its management staff without approval.

The Chairman of the bank, Dr. Olatunde Ayeni assured the shareholders  that the bank would  explore available and viable business  opportunities with the key sectors of the economy.

“The Bank will leverage on the recent acquisition of Mainstreet Bank  Limited to grow and depeen our retail franchise, with increased  presence across all the six geo-political zones in Nigeria,” he

posited.

Skye Bank had 206 branch network before the acquisition of Mainstreet  Bank but it has now jumped to 469 branches across the country.