Skye Bank Business Case Analysis (2013)

SKYE BANK’S CORPORATE GOVERNANCE

The bank is governed by a framework that defines the rights, roles and responsibilities of all stakeholders. This is to facilitate all necessary checks, balances, and incentives the needs to manage its various stakeholders. The Bank adheres strictly to the Central Bank of Nigeria (CBN) and the Securities & Exchange Commission (SEC) code of Best Practice on Governance system with best practice globally, and it plans subscribing to a governance rating organization to affirm its commitment to establishing a sound governance principle in the Bank.

In the last 12 months, the Bank has built a solid reputation by developing governance policies built on its core values.

It values its shareholders and committed to safeguarding their interests through accessibility, integrity and mutual respect in the conduct of its business. To ensure that it is guided by its governance principles, it developed a governance policy and set up an Investor’s Relation department to facilitate an effective communication between the management and the shareholders.

To ensure that its corporate governance practices are in compliance with international codes and best practices, the Board has established the following committees to assist it in the discharge of its corporate governance objectives.

:

1.General Purpose Committee

2.Staff Compensation & Remunerations Committee

3.Board Credit Committee

4.Audit Committee

5.Board Risk Management Committee

6.Board Compensation Committee and

7.Board Compensation Committee

STRENGTHS AND OPPORTUNITIES

• Excellent customer service driven by passion to meet and surpass customers expectations and supported by investments in world class information technology

• Improving asset quality

• Good profit margin

• Good knowledge and expertise of domestic markets

• Well diversified business portfolio to take advantage of emerging opportunities in Nigeria & beyond

• Opportunity to diversify into other areas of banking thereby reducing its perceived risk profile.

• Political stability would enhance its long term prospects and reduce its exposure.

• Strong brand name

• Experienced and dedicated management team

WEAKNESSES & THREATS

• Sophisticated customers demanding improved service at less cost

• Unrelenting war for talent

• Unstable global and domestic macroeconomic outlook in the short term

• Low crude oil prices

• Depreciation & devaluation in the value of Naira

• Credit crunch in the local financial market occasioned by margin facility

• Uncertainties in interest rates and other economic indicators would affect its risk exposure

 

                                   OBJECTIVES AND GOALS

It has been proposed to Skye bank that they undertake the following strategy initiatives:

IT Upgrade and Transformation

• Upgrade of the Bank‟s software, Flexcube,‟ from version 6.2 to version 12.0, which will be completed in Q2 2014
• Automation of operational processes to support Information and Communication Technology (ICT) Transformation Project

Cost Management

• Ensure that the maturities of the assets on which interest is earned and the maturities of the liabilities on which interest is paid are matched.

• Opt for Long term rates on both interest income and interest expenses, as long-term rates tend to be higher than those predicted by expected future short-term rates. This phenomenon is referred to as liquidity preference theory

• Avoid Arbitrary Cuts

• Industrialize Operations

Growth & Value Chain Based Solutions

• Actively seeking and granting of loans to perceived  performing loan borrowers

• Negotiate the C.O.T (Cost of Transfer) with high net worth businesses that perform multiple transactions so that they do not move their monies to other banks.

• Customers would be encouraged to patronize the bank more in the opening / establishment of letters of credit and Forex if the service time is reduced and remittances are done more accurately and reliably.

The ends sought by adopting the proposed Strategy initiatives includes :

• To maintain a stable and sustained increase in net interest income
• To maintain a portfolio of investments that would lead to the growth and development of the country and the bank
• To promote excellent customer service driven by passionate staff and supported by investments in world class Information Technology
• To reduce operating costs by at least 7% in the next operating year.
• Increase the net fees and commissions by 10% by the 2nd quarter of 2014