- Shares fall to record low to extend losses this year to 50%
- No plan communicated yet on restoring lender, S&P says
Skye Bank Plc was downgraded two levels by S&P Global Ratings, which cited increased default risk after regulators stepped in to oust the Nigerian lender’s top managers
The country’s central bank replaced Skye’s chief executive officer, chairman and 10 other directors on July 4, saying the Lagos-based bank’s liquidity and non-performing loan ratios consistently breached required levels. The stock has dropped each trading day since, falling to a record low on Tuesday, even after the central bank moved to calm markets after the intervention, saying Skye and the industry remained healthy.
S&P lowered its long-term global-scale rating on Skye to CCC- from CCC+, and its Nigeria national-scale ratings to ngCCC-/ngC from ngB+/ngB. It also placed the lender’s global scale short-term rating on credit watch negative, while maintaining the long-term ratings and national-scale short-term rating on credit watch negative, it said.
The “downgrade by S&P will worsen the negative perception of the equity,’’ Omotola Abimbola, a banking analyst at Afrinvest West Africa Ltd., said by phone from Lagos. “From the credit perspective, the bank has a high risk.”
The shares dropped 7.6 percent to 73 kobo by 11:30 a.m. in Lagos, extending losses this year to 50 percent.
“A default of Skye Bank within the next six months is highly likely, absent unanticipated significantly favorable changes in the bank’s condition,” S&P said in an e-mailed report. “At this stage, we understand the Central Bank of Nigeria has not yet communicated plans on how it intends to restore the bank’s business and financial profiles.”