The Central Bank of Nigeria (CBN), and the Asset Management Company of Nigeria (AMCON), have announced the completion of the sale of shares of Polaris Bank to a new core investor, Strategic Capital Investment Limited (SCIL).
Director, Corporate Communications, CBN, Osita Nwanisobi, disclosed this yesterday in a statement titled: “Announcement of the completion of the sale of shares in Polaris Bank to Strategic Capital Investment Limited (SCIL), a new core investor.”
The statement reads: “The Central Bank of Nigeria (CBN), and the Asset Management Company of Nigeria (AMCON), are pleased to announce the completion of a Share Purchase Agreement (SPA), for the acquisition of 100% of the equity in Polaris Bank (‘Polaris’ or ‘the Bank’) by Strategic Capital Investment Limited (‘SCIL’).
“Polaris has been operating as a bridge bank since 2018 when the Central Bank of Nigeria intervened to revoke the licence of the former Skye Bank Plc and established Polaris Bank to assume its assets and certain liabilities.
“As part of the CBN intervention, consideration bonds with a face value of N898 billion (future value of N1.305 trillion) were injected into the bridge bank through AMCON, to be repaid over a 25-year period.
“These actions were taken to prevent the imminent collapse of the bank, enable its stabilisation and recovery, protect depositors’ funds, prevent job losses and preserve systemic financial stability.
“SCIL has paid an upfront consideration of N50 billion to acquire 100% of the equity of Polaris Bank and has accepted the terms of the agreement which include the full repayment of the sum of N1.305 trillion, being the consideration bonds injected.
“The CBN thus received an immediate return for the value it has created in Polaris Bank during the stabilisation period, as well as ensuring that all funds originally provided to support the intervention are recovered.
“The sale was coordinated by a Divestment Committee (the ‘Committee’) comprising representatives of the CBN and AMCON, and advised by legal and financial consultants.
“The Committee conducted a sale process by ‘private treaty’, as provided in Section 34(5) of the AMCON Act to avoid negative speculations, retain value and preserve financial system stability.
“In the process, parties who had formally expressed an interest in acquiring Polaris Bank, subsequent to the CBN intervention in 2018, were invited to submit financial and technical proposals. Invitations to submit proposals were sent to 25 pre-qualified interested parties, out of which three (3) parties eventually submitted final purchase proposals following technical evaluation.
“All submissions were subject to a rigorous transaction process from which SCIL emerged as the preferred bidder having presented the most comprehensive technical/financial purchase proposal as well as the highest rated growth plans for Polaris Bank.”
SCIL has paid an upfront consideration of N50 billion to acquire 100% of the equity of Polaris Bank and has accepted the terms of the agreement which include the full repayment of the sum of N1.305 trillion, being the consideration bonds injected.
Commenting on the transaction, CBN Governor, Godwin Emefiele, was quoted as saying: “This sale marks the completion of a landmark intervention in a strategic institution in the Nigerian banking sector by the CBN and AMCON.
“We commend the outgoing board and management for their vital role since the bridge bank was established; in stabilising the Bank’s operations, its balance sheet and implementing strong governance structures to address the issues that led to the intervention.
“This process has provided the CBN with an unprecedented opportunity to recover its intervention funds in full and promote financial stability and inclusive growth.
“We wish SCIL well as they implement growth plans to build the bank from the strong foundations that have been established.”
Due process
Barely eight days after directing the CBN to suspend the process until it could prove the transaction would not jeopardise public interest, the House of Representatives made a complete volte-face, saying the sale of the bank went through due process.
The Chairman, House Committee on Legislative Agenda, Henry Nwabuba, had said: “The House recalls that Polaris Bank is borne out of the bailout of the defunct Skye bank Plc that failed due to poor corporate governance and non-performing loans for which a whooping sum of close to a trillion naira of public fund was committed to resuscitating the bank.
“The House is dismayed that the sale of the bank for a purported N40 billion amounts to just about four per cent of public funds invested in the bank. The House is dismayed further that the proposed sale is shrouded in secrecy and is opaque and requires that it is done in transparency and accountability to eliminate insinuations of corruption.”
But in a ruling following the adoption of a motion of urgent public importance sponsored by the same Nwabuba, whose committee is still investigating the share sale, the House approved the process.
Addressing journalists on Wednesday, he said during the scrutiny of various documents and extant regulatory process on the sale of the bank, the lawmakers discovered that there was evidence of substantial compliance with due process.
He disclosed that out of the 35 companies invited to bid for the bank, the regulatory agency shortlisted the bidders to 15 and later seven and afterwards got presidential approval to proceed with the sale of the bank.
So far, everything looks really good. We do not have any cause for concern for now. For the stability of the financial systems in Nigeria, we would call on Nigerians to know there is nothing wrong with Polaris Bank as a bank.
Nwawuba said: “On the last legislative day before we broke up from plenary sessions to work on the budget, there was a motion on the floor asking the CBN to suspend the sale of Polaris Bank and cutting up an ad-hoc committee to investigate the circumstances, and I happened to have emerged to chair that committee.
“We are happy so far, but as you know it is an investigation and hopefully, we intend to conclude this investigation and lay the report before we commence sitting.
“So far, everything looks really good. We do not have any cause for concern for now. For the stability of the financial systems in Nigeria, we would call on Nigerians to know there is nothing wrong with Polaris Bank as a bank.
“What the house is looking at is the process of the acquisition or the sale and so far, we are confident from what we are seeing.
“Until we conclude this investigation, I would not be able to speak authoritatively on the matter, but from what we are seeing so far, particularly with the approvals and the steps taken so far there seems to be substantial compliance on the matter so far.
“Nigerians are enjoined to continue to relax and leave their deposits with the bank and continue their business with the bank.”
