The Central Bank of Nigeria (CBN) and the Asset Management Corporation of Nigeria (AMCON) have formally disclosed the completion of a Share Purchase Agreement (SPA) for Strategic Capital Investment Limited (SCIL) to acquire 100% of the equity in Polaris Bank. This comes as the House of Representatives approved the sale of Polaris Bank on Wednesday, noting that the transaction followed established procedures and received presidential approval.
In accordance with a statement issued by the CBN director of corporate communications, Osita Nwanisobi, on behalf of the CBN and AMCON, SCIL paid an upfront consideration of N50 billion to acquire 100% of Polaris Bank’s equity and had also accepted the terms of the agreement.
“The CBN thus received an immediate return for the value it created in Polaris Bank during the stabilization period, as well as ensuring that all funds originally provided to support the intervention are recovered,” according to the statement. “The sale was coordinated by a Divestment Committee (the Committee) comprising CBN and AMCON representatives, and was advised by legal and financial consultants.” To avoid negative speculation, retain value, and maintain financial system stability, the Committee conducted a ‘private sale process, as provided in section 34(5) of the AMCON Act.
Parties who had formally expressed an interest in acquiring Polaris Bank following the CBN intervention in 2018 were invited to submit financial and technical proposals as part of the process. Invitations to submit proposals were sent to 25 pre-qualified interested parties, with three submitting final purchase proposals after technical evaluation. “All submissions were subjected to a rigorous transaction process,” the statement continued, “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.”
Meanwhile, Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria, was quoted as saying that the sale “marks the completion of a landmark intervention in a strategic institution in the Nigerian banking sector by the CBN and AMCON.” He praised the outgoing board and management for their critical role in stabilizing the bridge bank’s operations, balance sheet, and implementing strong governance structures to address the issues that led to the intervention. The process, according to the Governor, has provided the CBN with an unprecedented opportunity to fully recover its intervention funds while also promoting financial stability and inclusive growth. He wished SCIL success as they implement growth plans to build the bank on the solid foundations that have already been laid.
Polaris has been operating as a bridge bank since 2018, when the Central Bank of Nigeria intervened to revoke the former Skye Bank Plc’s licence and established Polaris Bank to assume its assets and certain liabilities. As part of the CBN intervention, consideration bonds worth N898 billion (future value of N1.305 trillion) were injected into AMCON and will be repaid over a 25-year period. The actions were taken, according to the Bank, to prevent the bank’s imminent collapse, enable its stabilisation and recovery, protect depositors’ funds, prevent job losses, and maintain systemic financial stability.
On Wednesday, October 19, 2022, the chairman of the House of Representatives Ad-hoc Committee investigating the sale of Polaris Bank, Hon. Henry Nwawuba, stated that the lawmakers discovered evidences of substantial compliance with the process while scrutinizing various documents and the existing regulatory process on the sale of the bank.