Foremost financial and investment analyst, Mr. Bismarck Rewane, has commended the Federal Government, through the Central Bank of Nigeria (CBN), Asset Management Corporation of Nigeria (AMCON) and Nigeria Deposit Insurance Corporation (NDIC) for the establishment of Polaris Bank Limited. Rewane, who is the Managing Director/Chief Executive Officer of Financial Derivatives Company Limited in Lagos, said the formation of the bank has ensured return of confidence in the nation’s banking sector and assured safety of depositors’ fund in the defunct Skye Bank as a result of the absorption of its assets and liabilities.
Speaking on Business Morning, the breakfast business programme on Channels Television, monitored on Monday, in Lagos, he said the regulatory intervention by the CBN, NDIC and AMCON which resulted in the incorporation and recapitalisation of the new Polaris Bank to the tune of N786 billion, has ensured adequate capitalisation and liquidity within the banking sector.
“So far, they are being very proactive; but what one must take into consideration is that the last thing we need is financial systemic instability. The purpose of that move is to isolate what was a potential problem. Skye Bank and the banking system had four particular problems; the problem of governance, crisis of liquidity, and crisis of confidence and also the crisis of solvency”, he stated. Speaking further, he noted, “First, the CBN changed the management and put new seasoned hands to run the place. I know M.K. Ahmad very well, and Tokunbo Abiru. These are a safe pair of hands. So that gave confidence.”
Rewane urged the regulators to continue to ensure that risks in the financial system are contained and appropriately isolated where necessary to forestall the situation of a contagion. He commended the seamless transition from Skye Bank to Polaris Bank as the “benefit of doing the right thing” while noting that the disruptive effect of allowing a disorganized exit would have been far reaching. “Skye Bank had 8,000 employees. The Economist Intelligence Unit (EIU) says that every household in Nigeria has five occupants. So if you multiply that by 8,000, you will have 40,000 people directly and indirectly affected if you fire all of them,” he stated.
