By Chuks Oluigbo
...buyer pays N50bn upfront, accepts full repayment of N1.305trn
Barely a week after the House of Representatives directed the Central Bank of Nigeria (CBN) to suspend the planned sale of Polaris Bank, the apex bank and the Asset Management Company of Nigeria (AMCON) have confirmed the completion of a Share Purchase Agreement for the acquisition of 100 percent of the equity in Polaris Bank by Strategic Capital Investment Limited.
The confirmation on Thursday came after the House of Representatives on Wednesday reversed itself and okayed the sale of Polaris Bank, saying it followed laid-down procedure and the relevant presidential approval.
"SCIL has paid an upfront consideration of N50 billion to acquire 100 percent 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," CBN and AMCON said in a statement issued by Osita Nwanisobi, CBN's director, corporate communications department, on behalf of the two entities.
"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," they said.
The House of Representatives had earlier said the suspension of the sale of Polaris Bank became necessary to "avert public outcry and untoward reaction from critical stakeholders in the economy, foreign business partners, the banking community, depositors, correspondent banks", after the news emerged that the CBN and AMCON planned to sell the bank for N40 billion. The legislators argued that such an amount was less than 4 percent of the money used to bail out the defunct Skye Bank, which was renamed Polaris Bank.
However, on Wednesday, the ad hoc committee set up by the House to investigate the proposed sale of Polaris Bank said it found evidence of substantial compliance with laid-down procedures in the process. It said about 35 companies were invited to bid, from which the number went down to 15, and to seven, and ultimately a recommendation was made and a presidential approval given.
The CBN had in 2018 revoked the licence of the former Skye Bank Plc and established Polaris Bank to assume its assets and certain liabilities, which has since then operated as a bridge bank.
"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," Nwanisobi explained in the statement on behalf of the CBN and AMCON.
"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," the statement said.
The statement said the sale of Polaris Bank was coordinated by a Divestment Committee comprising representatives of the CBN and AMCON, and advised by legal and financial consultants.
It said 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 parties eventually submitted final purchase proposals following technical evaluation," the statement said.
"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.