Anxiety As Polaris Bank Awaits New Board

This is even revelations emerged last night that the board and management were not involved in the sales process.

But the situation has created tensed atmosphere at the bank as nobody is sure of the direction of the new owners.

However, justifying the action of CBN and the Asset management corporation of Nigeria (AMCON), a source closer to the deal told metrobusinessnews.com (MBN) that it is at the prerogative of the owners to sell the bank to who ever meets their terms without necessarily carrying the board along.

“The aim of government is to ensure that the bank is sold to a credible investor so as to avoid a run on the bank and the attendant losses,” he added.

“It’s like you, trying to sell your shares in Firstbank, you don’t need to inform the MD.

” what’s important is that the board and management were able to keep the bank running without creating any panic or run in the system.

“We are happy with the whole process and by the grace of God, a new board should be constituted by CBN today as the bank will not allow any vacuum to be created,” says the source.

A statement signed by Mr Osita Nwanisobi, Director, Corporate Communications and posted on CBN website on Thursday, said the sale was concluded after a Share Purchase Agreement (SPA) for the acquisition of 100 per of the equity in the bank by SPA.

Polaris has been operating as a bridge bank since 2018 when the CBN intervened to revoke the licence of the former Skye Bank Plc.

MBN had carried the story recently that the bank was being sold for N50billion, but, as usual, it was trailed with accusations and counter accusations and denials, even from the bank.

Polaris Bank had not been able to meet expectations of some of its customers in the areas of prompt and customized services and digital solutions, among others, particularly, among some civil servants in Lagos state that still maintain their salary accounts with the bank.

With the development, expectations are high that situations might change for better, though, might not be immediate.

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.

These 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.

It said SCIL had paid an upfront consideration of N50 billion to acquire 100 per cent of the equity of Polaris Bank.

The statement further said it had also accepted the terms of the agreement, which included the full repayment of the sum of N1.305 trillion, being the consideration bonds injected.

It said, “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.”

According to the statement, 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,” it said.

Commenting on the transaction Mr Godwin I. Emefiele, Governor of CBN said: “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.
ALSO READ:Reprieve For States As NEC Moves To Review Repayment Of FG’s Facility Modalities   
“We wish SCIL well as they implement growth plans to build the bank from the strong foundations that have been established.”

But some analysts say last night that some issues, such as business and financial interests of the bank in some organizations, that nay be outstanding may arise, which may lead to dismissal and terminations of appointments of some staff, based on the level of their involvement in the said transactions and personal interests.

But, according to the source, the Board and eventual new management will be fair to all.