Tag: SKYE BANK

Over 200 customers and business partners in the Micro, Small and Medium Enterprise (MSME) sector attended the Southeast edition of Skye Bank’s SMEs’ seminar in Onitsha, Anambra State.

Titled: Nurturing businesses for growth, the bank described the seminar as part of its contributions to the development of the Micro, Small and Medium Enterprise (MSME) sector of the economy.

Its Regional Director, Southeast I, Dr. Charles Udogu, said MSMEs are an important growth driver in any economy, warning key economic players in the nation not to neglect the sector.

Udogu said: “Having identified the gap in the SMEs’ sector, Skye Bank organised this seminar to bridge this gap through the bank’s business seminar series.”

Its Head, Small Business Group, Mrs. Ayo Olojede, said the lender was coming up with solutions that would help to minimise the cost of doing businesses for small business owners.

“If you want to access a loan, there are some simple but fundamental requirements the bank will expect –  like a business plan,  cash flow projections and basic business skills to determine the viability of the business and ways of partnering with customers to deliver value,’’ Olojede said.

She said the event was held to enlighten the bank’s customers on areas of managing their cash flow and other areas of business operations among other issues.

Managing Director, Dilimson Holdings Limited, Mr. George Umobi, urged participants to confront challenges faced in the course of growing their businesses adding that  they should seize the opportunity presented to them by the lender and make the best of it.

Participants’ questions on Skye Bank and the banking were addressed by the bank’s representatives.

Another seminar holds in the Southwest next month.

Skye Bank Plc, the Nigerian lender that sold bonds last week, said it plans to raise as much as 50 billion naira ($250 million) by selling stock this year as it seeks to boost liquidity and fund operations.

“We are looking at the second to third quarter to raise the funds,” Chief Executive Officer Timothy Oguntayo said in an interview on March 27 in Lagos, Nigeria’s commercial capital. “Details will be announced after our annual meeting.”

Nigeria, Africa’s largest economy and most-populous country, held weekend elections that were generally peaceful and transparent, an observer mission from the Commonwealth said. Ballots cast by the 56 million eligible voters are still being counted. The successful holding of the vote could prompt an upturn in business for banks, Oguntayo said.

“The end of the election is expected to increase economic activity and projects that will require funding by banks,” he said. “Our loan growth will be muted, but moderate.”

Skye Bank advanced 1.7 per cent to N2.45 by 1:41 p.m. in Lagos trading, valuing the lender at about N32.4 billion.

Skye Bank, which sold 20 billion naira of 90-day bonds last week, needs additional liquidity, Oguntayo said. The lender said March 24 it will sell as much as 100 billion naira of short-term local debt over the next year to increase cash.

Skye Bank could raise as much as N50 billion in a supplementary equity issue scheduled for the market within the next six months. This will further enhance the funding diversity of the bank’s balance sheet after it successfully launched a N100 billion commercial paper issuance programme last week.

Skye Bank plans to undertake the supplementary new equity issue between the second and third quarter, though it has not decided on the key details of the offer including the actual size and the offering public.

Its Group Managing Director,  Mr. Timothy Oguntayo, who confirmed the plan to raise additional equity funds, said the bank is still studying proposals on the new issue submitted by various issuing houses.

According to him, the bank is certainly going to raise additional equity fund and the actual amount could be within a maximum of N50 billion.

He said clearer picture of the new equity issue would come after the bank’s annual general meeting noting that the bank will make the announcement for the new issue at the appropriate time.

The lender at the weekend closed the book building process for its bid to raise some N20 billion in the first tranche of its N100 billion, about $500 million, domestic commercial paper issuance programme.

Under the terms of the issuance, the commercial papers carry a tenor of 90 days with an indicative yield of between 75 to 100 basis points above the 91-day Nigerian Treasury Bill (NTB). The commercial papers will be quoted on the FMDQ OTC Plc, the over-the-counter market for money market instruments. Minimum subscription is N5 million with subsequent addition in multiples of N1, 000.

Oguntayo, said with the launch of the first series, the bank plans to raise the N100 billion within a period of 12 months, although its funding need will determine whether it will raise the entire or part of the full amount under the programme.

He noted that while the bank’s liquidity position is well ahead of regulatory requirement, the bank is issuing the commercial papers to support its liquidity as it continues to expand its transactions and opportunities to customers.

He added that the bank also opted for the commercial papers as part of its trail-blazing efforts to deepen innovation and products in the Nigerian financial markets, noting that the bank was also the first to float and list a real estate investment trust (Reit) on the Nigerian stock market. The Central Bank of Nigeria (CBN) and FMDQ recently introduced commercial paper issuance progamme. It is the first bank to issue under the dispensation.

“Skye Bank is not in dire need of liquidity, it is partly meant to create market awareness about the new product.  It is also a way to boost liquidity other than deposits,” Oguntayo said.

He expressed optimism that the issuance progamme, which is targeted at Nigerian institutional investors, will be successful given the profile of the bank as a strong brand with good ratings and stable and experienced management.

Nine-month report for the period ended September 30, 2014 showed that Skye Bank has total assets of N1.11 trillion. Skye Bank had acquired Mainstreet Bank from the Asset Management Corporation of Nigeria (AMCON) in October 2014.

 

The addition of Mainstreet Bank to its stable has, no doubt, raised the profile of Skye Bank to   a mega financial institution in Nigeria, reports Alvin Afadama.

There’s a level of achievement one attains, and people will start saying that at this rate, the sky is no longer the limit. This, in a sense, is the story of Skye Bank. With its acquisition of Mainstreet Bank, Skye Bank has conveniently been elevated to the status of a financial institution, aptly described as ‘Being too-big to Fail.’ In other words, the sky is no longer the limit for Skye Bank.

Skye Bank is not new to acquisitions. It’s, in  fact, a veteran and a product of many acquisitions. It is indeed a bank at home with mergers.

It is shown that in 2006, Prudent Merchant Bank Limited merged with four other banks to become Skye Bank Plc. The four other constituent banks include 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 take-off, that seamless consolidation soon saw the bank evolved into one of the top financial institutions in the country. That high score, in the view of analysts, has prepared the bank for greater roles, 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 has admitted that the acquisition of Mainstreet will avail it of many benefits, including business optimisation, and greater ability to offer business convenience to its teeming retail and commercial customers, with a combined branch network of over 450 Nigeria.

Market watchers are of the opinion, and rightly so, that the new Skye Bank, will ultimately transform into one of Nigeria’s leading megabanks, pointing out that apart from investor confidence which would see investors support moves by the bank to strengthen its capital base as the management might deem necessary, the bank is expected to aid a seamless business combination with the acquired unit.

 

Prospects

 

Even in its previous state, Skye Bank has demonstrated a knack for profit making. In the first nine months after the first consolidation of 2006, the bank posted profit of N2.5 billion. By the end of the same period in 2007, it’s management led by then Group Managing Director/CEO, Akinsola Akinfemiwa, was also able to more than double the figure to N5.5 billion. This reinforced the belief of the investing public in the management of the bank.

 

Pedigree

 

Skye Bank has a cumulative wealth of experience spanning over 50 years, which historically makes it one of Nigeria’s oldest banking institutions. The major strengths of the bank, amongst others, include its diverse ownership structure, quality management and staff, prudent financial management and strong reputation on service delivery. To this the bank has now 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 late 2014, Skye Bank was quoted on the Nigerian Stock Exchange, with of a shareholder list of over 450,000 names, made up of individual and corporate investors. This, industry analysts are quick to say 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 put 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 investor influence which leaves it wholly to professional management.

 

Portfolio

 

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, or REIT, to be listed on the Nigerian Stock Exchange, thus helping investors benefit from growth throughout the market while at the same time reducing their investment risks.

In the case of the shipping industry, Skye Bank was the first financial institution in Nigeria to set up a department dedicated to the maritime business, leading to the financing of the purchase of the Seaway Rover Panama, a first of its kind by any Nigerian bank.

In yet another achievement, the bank in 2011, scored another first when it introduced a Naira denominated MasterCard debit card, called “MasterCard Verve,” used to make payments across multiple channels, like the Automated Teller Machines, Point of Sales terminals, internet and telephones, among others.

Aside the debit card, Skye Bank has brought a lot of innovations into the financial market through the introduction of several e-payment solutions and platforms which have eased the inconvenience suffered by many bank customers.

Among the e-pay solutions introduced by the bank is the Skye Visa cards, Skye Mobile and internet banking.

It is with these past successes that industry analysts have expressed confidence in Skye bank’s capacity and ability to maximise the acquisition of Mainstreet Bank to deliver on its reach and assets like it did in the past.  The bank’s management over the period, has been consist in its prudent management of its resources, resulting in its steady growth to the point that Central Bank of Nigeria (CBN), classified Skye Bank among eight banks strategically designated as ‘Systemically Important Banks.’ This accolade is an eloquent testimony to the bank’s industry leadership, strong market share, diverse location spread, and strong brand equity.

 

Moving forward

 

In demonstration of its readiness to make the most of the acquisition, Skye Bank has given details of how the acquisition of Mainstreet Bank Limited will positively impact its business operations and enhance the achievement of its strategic objectives and goals.

It said the acquisition will avail it of many benefits, including business optimisation, and greater ability to offer business convenience to its teeming retail and commercial customers, with a combined branch network of over 450 Nigeria.

These, market watchers contend will see the evolution of Skye Bank into one of Nigeria’s leading megabanks. Apart from investor confidence which would see investors support moves by the bank to strengthen its capital base as the management might deem necessary, Skye Bank, with its new addition, is expected to aid a seamless business combination with the acquired unit.

 

Investment Move

 

Mainstreet Bank Limited, being the acquired unit is coming with inherent advantages as it would help Skye Bank deepen penetration in parts of Nigeria where it was hitherto not well represented like the Southeast and Southsouth regions. The acquired unit has 201 branches and nine subsidiaries, with 54 branches located in the two regions earlier mentioned. This would help Skye Bank compete well in the retail segment  Skye Bank has expressed optimism that the acquisition would bring valuable synergies from the mutual focus areas of commercial and retail banking of the two entities in a larger Skye Bank. The bank noted that its focus is on retail and commercial banking, known as the main focus areas of Mainstreet Bank Limited.

Another area of strength that Skye Bank would be hoping to explore from the transaction, is Mainstreet Bank’s power in the agribusiness sector. Indices show that Mainstreet Bank Limited has a history of successfully managing agricultural loans. From Mainstreet Bank’s financials, agricultural loans account for 12.6 percent and 16.9 percent of its loan portfolio in 2012 and 2013, trailing the ‘general’ sector.

The evolving mega bank hopes to tap from the human resource expertise at Manistreet Bank to sustain this. The demonstrable expertise at Mainstreet Bank has seen it managing agriculture loans so well that its non-performing loan ratio remains very negligible at 0.01 percent. This is why Skye Bank has already identified the opportunity and would explore it to improve its expertise in this area, and therefore raise its market share in the agriculture sector.

This adds to address one of the tricky issues in business combinations – staff matters. The human resource at Mainstreet Bank can rest assure that their expertise would be required to complement their counterparts at the evolving Skye Bank both to manage the branches where Skye Bank is not presently well represented and the areas where Skye Bank would need to strengthen human expertise.

No matter how things go, Skye Bank is poised to evolve into a mega bank with a history supporting the bid of the management in actualising this ambition. For Skye Bank, the sky is certainly not the limit.