After the sale of Polaris Bank, new facts have emerged indicating how the Governor of Cental Bank of Nigeria (CBN), Mr. Godwin Emefiele and his cronies allegedly sold the bank worth N1.3 trillion to themselves after pumping public funds to resuscitate a “dead bank”, as an observer described it.
CBN and the Asset Management Company of Nigeria (AMCON) had formally announced the completion of a Share Purchase Agreement (SPA) for the acquisition of 100% of the equity in Polaris Bank by Strategic Capital Investment Limited (SCIL).
According to a statement issued by CBN Director of Corporate Communications Department, Mr. Osita Nwanisobi, on behalf of the CBN and AMCON, SCIL had paid an upfront consideration of N50 billion to acquire 100% of the equity of Polaris Bank and had also accepted the terms of the agreement which include the full repayment of the sum of N1.305 trillion, being the consideration bonds injected.
The statement reads: “CBN… 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,” the statement added.
Meanwhile, the CBN Governor, Mr. Godwin Emefiele, was quoted as saying that the sale of the bank “marks the completion of a landmark intervention in a strategic institution in the Nigerian banking sector by the CBN and AMCON.”
According to the Governor, the process provided CBN with an unprecedented opportunity to recover its intervention funds in full and promote financial stability and inclusive growth.
In the meantime, Polaris had been operating as a bridge bank since 2018 when CBN 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) was injected into the bridge bank through AMCON, to be repaid over a 25-year period.
The Bank noted that the actions were taken to prevent the imminent collapse of the bank, enable its stabilisation and recovery, protect depositors’ fund, prevent job losses and preserve systemic financial stability.
Reacting to the development, Mr. Segun Olakoyenikan of AFP Fact Check, noted that the transaction smirks of non-transparency.
Taking to his Twitter handle, Mr. Olakoyenikan wondered how Nigeria could sell a 100% stake in Polaris Bank to Strategic Capital Investment Limited, “a company registered barely 6 months ago”.
Moreover, he noted that only N50 billion upfront payment was made for the bridge bank worth N1.3 trillion.
“The remainder is payable in bonds over 25 years, at a significant discount to N1.476 trillion CBN committed to rescuing the defunct Skye Bank six years through 2018.
“Meanwhile, the market cap of this same bank never surpassed N202 billion in its lifetime, a valuation recorded 10 years before it failed,” he stressed.
Another source noted that the bank was already dead before the intervention.
According to the source, they pumped in money to “stabilize” the bank then sell it back to themselves with huge deficit that can never be recovered.
“Even N500 billion is not enough money to pay upfront. In the next 6 months, they will pass it to another buyer after mismanagement,” he regretted.
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