By John Omachonu
The planned sale of the bridge financial institution, Polaris Bank by the Central Bank of Nigeria (CBN) for a paltry sum of N50billion is causing ripples in the industry.
MBN reports that the Bank, which was established by the CBN in September 2018 on the heels of the reported inability of the owners of the heavily encumbered and now defunct Skye Bank to recapitalize it, may have gulped over N1. 4 trillion on rescue operations by CBN.
This is aside from expenditure of the bad bank, Asset Management Corporation of Nigeria (AMCON) currently sipwrontemdong the institution.
But industry watchers and concerned analysts are piqued by what they describe as the ‘secret deal’, which they argue may have shut some prospective bidders, that could have possible raised the price out.
Other areas of concern is the paltry sum of ‘giveaway sum’, being proposed as the agreed price, on a bank that has gulped about N1. 47 trillion public funds to bring to the present level.
Also, MBN confirmed from a credible source that the board and management of the bank are not in the picture of the ongoing discussions with the prospective buyer.
So, Analysts are worried that the seeming secrecy may not have provided the due diligence on both buyers and the bank, which, according to them, could have attracted more Money for the government, particularly, now that the country’s Fortunes are fast dwindling.
Last April, the bank released its first quarter 2022 results, which ended March 31, 2022, with the Company reporting worldwide sales of $1,957 million, approximately flat versus the first quarter of 2021.
The bank also recorded net income of $70 million decreased 48 percent and diluted earnings per share (EPS) of $1.14 decreased 46 percent compared to the first quarter in 2021.
Adjusted net income for the quarter was $79 million, down 46 percent and adjusted EPS of $1.29 was down 44 percent, in each case as compared to the first quarter of 2021.
Gross profit margin contracted 438 basis points to 20.3 percent. Adjusted gross profit margin of 20.3 percent contracted 447 basis points driven primarily by inflationary pressures and supply chain challenges, partially offset by strong pricing, a lower promotional environment and sourcing mitigation efforts.
According to financial statement from its website, Mike Speetzen, Chief Executive Officer of the bank says,
“Sales for this quarter remained relatively flat to last year, depressed by continued supply chain pressures. While much of our focus centers on navigating the highly volatile and challenging supply chain environment, demand for our industry-leading products and services remains healthy, as we continued to see high levels of pre-sold orders and low cancellations, strong short- and long-term repurchase rates, and record levels of PG&A attachments.
“Sales for this quarter remained relatively flat to last year, depressed by continued supply chain pressures. While much of our focus centers on navigating the highly volatile and challenging supply chain environment, demand for our industry-leading products and services remains healthy, as we continued to see high levels of pre-sold orders and low cancellations, strong short- and long-term repurchase rates, and record levels of PG&A attachments.
We are making strategic investments in both innovation and operations to enable our long-term growth plans and productivity needs and strengthen our position as the global leader in powersports.“
In fact, the bank has an outlook for the year expecting 2022 sales to be in the range of $9,215 million to $9,455 million, an increase of 12 percent to 15 percent over 2021.
The Company continues to expect adjusted EPS to be in the range of $10.10 to $10.40 for the full year 2022, an increase of 11 to 14 percent from 2021.“
Despite these expectations, CBN has been looking for investors to take what an analyst regards as, ‘load and burden’ over the regulatory authorities.
But now that there seems to be light at the seeming end of the turnel, market watchers say Emefiele and other wheeler-dealers could have gone a bit further to squeeze more for Nigerians by advertising the bank rather than the planned sale of the amount, regarded by even some insiders as ’embarrassingly low’, which could mean another public funds going down the drain.
Confirming the deal to MBN, one of the ‘insiders’ said:
“I can confirm to you that discussions have been concluded, but certainly, not the amount you quoted to have read, but slightly above that amount… I think its about N50billion.“
Pressed further, he said, “One is not thinking about recouping the total amount spent, but, the proposed amount is just too low. At least, one should have thought that at least, comfortable percentage of the amount, if not more should have been the ideal price.“
Another source said, “The problem with us is that we hardly learn, apparently, referring to the low offered price, if not how do you explain what is happening that the normal protocol of expression of interest and the normal publications by CBN, leading to selection from the bidders, the highest and possibly preferred and alternative or runners-up would have been known by the public and more acceptable amount may have been arrived at. “
But CBN is said to be committed to the deal to offload the bank to an investor, reported as a businessman
However, effort to get the response of CBN proved abortive as Osita Chinweuba Nwanisobi, Acting Director, Corporate Communications of the bank would neither respond to my whstsapp message nor pick my calls.
The transaction, if it goes through, would amount less than one percent of the taxpayers’ funds poured into the lending house since its 2018 nationalisation.
MBN also learnt that the Governor has already received a presidential approval to advance the sale, with public disclosure, barring unforseen circumstances, due any time soon, a development the analysts ssy, would be mere routine and to fulfill all ‘righteousness’.
Others’ fears bother on the fact that the same fate may that was the lot of distribution companies, (DisCos), for which consumers are still suffering from, may befall the bank and the staff since they fear that due deligence on the buyer, who is not yet known to the public may have been enhanced more by public participation.
They further argue and wonder why the CBN and other government agencies did not think of going public by listing it on the exchange rather than the ‘action’ that may further impact negatively on the bank whose feet are still wobbling in the industry.
Besides, MBN learnt that the Bad bank, AMCON, which has has legal obligations to list the bank for sale publicly has become, according to analysts like an ‘octopus’ which has become ‘larger than life’.
AMCON is said to have too much of issues that are weighing on its operations, such as the over N4trillion owed it by some recaciltrant debtors and the fact that manpower issue is becoming a major one now to either manage some of the companies taken over, not to talk of packing these companies, like Polaris bank for the public.
Besides, some analysts say most of government institutions and agencies like CBN, NDIC and AMCON, among others have become fully entrenched in the politics of the nation, particularly, with any ruling government for security of the appointments and tenures of appointed board and management staff.
“That is why the two sister organizations seem to be playing along with CBN, because the issue is, who has more of the ears of the president or some powerful members of his cabinet, would naturally dictate the tone of events, at least not to be seen encroaching or stepping on any powerful toes, “ says an analyst.
Polaris Bank was nationalised in September 2018 after AMCON bought its debts. It was known as Skye Bank until the takeover. But AMCON has not been able to sell the bank to investors since the takeover, which was precipitated at the time by alleged corruption, financial crisis, among other reasons.
Four years on, and as the Buhari administration is winding down as well as the tenure of AMCON, the only available option is to dispose some of thede legacy institutions that are considered, ‘technically insolvent’ but still under the bad bank.