…divestment followed relevant laws, global best practices
The Central Bank of Nigeria (CBN) has set the record straight regarding the recent sale of the Federal Government’s interest in Polaris Bank Ltd.
The apex bank said 25 firms were invited to participate in the sale process via the execution of a non-disclosure agreement and the divestment was executed based on the relevant laws, global best practices for bank resolutions, and requisite regulatory approvals.
The CBN was reacting to what it described as “a spurious, malicious, and misleading online publication, which made several false claims concerning the recent sale of the Federal Government’s interest in Polaris Bank Ltd”.
The CBN and the Asset Management Corporation of Nigeria (AMCON) had on October 20, 2022 announced the sale of Polaris Bank following the completion of a Share Purchase Agreement (SPA) for the acquisition of a 100 percent stake in Polaris Bank by Strategic Capital Investment Limited (SCIL).
The apex bank had explained that SCIL paid upfront of N50 billion to acquire a 100 percent stake in Polaris Bank and accepted the terms of the agreement, including the full repayment of the sum of N1.305 trillion as the value of the bonds when the licence of the former Skye Bank Plc was revoked in 2018 to assume its assets and certain liabilities.
But it now appears that an online publication (not mentioned) is presenting an account of what transpired different from the CBN’s account.
In a statement on Wednesday, 4 January 2023 titled ‘Sale of Polaris Bank: CBN sets record straight’ and signed by Osita Nwanisobi, its Director of Corporate Communications, the CBN said it was constrained to correct the inaccuracies contained in the said online publication given the potentially grave implications for the stability of the bank, financial sector and the Nigerian economy.
“For the records, the public is referred to the statement dated October 20, 2022 by CBN & AMCON announcing the sale of 100 per cent equity in Polaris Bank to a new core investor, Strategic Capital Investment Limited, wherein it provided copious details of the process by which the sale was conducted,” the CBN said.
The banking sector regulator noted that contrary to claims in the said online publication, the divestment from Polaris Bank was supervised by a divestment committee comprising senior representatives of AMCON and CBN, and supported by reputable legal and financial advisers.
“In addition, the divestment mode, process and decision received requisite board and regulatory approvals. At no time did any other party make a higher purchase offer as falsely claimed by the online publication,” the apex bank said.
“The entity in question, Fairview Acquisition Partners, had indicated an interest in acquiring two banks, including Polaris Bank, for a total sum of N1.2tn, an indicative offer which significantly discounted the existing N1.31tn debt owed by Polaris Bank to AMCON and so represented a material loss to the Federal Government,” it said.
The CBN said despite that Fairview Acquisition Partners’ offer represented “a material loss to the Federal Government”, the financial advisors still invited the firm, alongside 24 other parties, to participate in the sale process via the execution of a non-disclosure agreement, the first stage of the process.
According to the CBN, the financial advisors informed the committee that Fairview Acquisition Partners neither executed nor returned the NDA despite verbally confirming receipt of the agreement and after follow-up from the financial advisors.
“Therefore, Fairview Acquisition Partners did not take the opportunity to update their offer by participating in the divestment process and thus did not make a binding purchase offer for Polaris Bank,” the bank said.
The CBN said the committee, along with its legal and financial advisers, conducted a rigorous technical and financial evaluation of the purchase proposals, assessing promoters’ fitness and propriety, offer price received vs. reserve price, funding structure and financial capacity, strategy and growth plans, among others.
Polaris Bank Ltd operated as a bridge bank from 2018 when the CBN intervened to revoke the licence of the former Skye Bank Plc and established Polaris Bank to assume its assets and certain liabilities. To prevent the imminent collapse of the bank, enable its stabilisation and recovery, protect depositors’ fund, prevent job losses and preserve systemic financial stability, 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.
