CBN, AMCON completes the sale of Polaris Bank in a N50 billion deal

The completion of a share purchase agreement for the full acquisition of Polaris Bank by Strategic Capital Investment Limited has been officially announced by the Central Bank of Nigeria and the Asset Management Company of Nigeria (AMCON).

On Wednesday, the House of Representatives approved the acquisition of Polaris Bank, stating that the transaction adhered to established procedures and had the necessary presidential permission.

Speaking about the acquisition on Wednesday, Hon. Henry Nwawuba, Chairman of the Ad-hoc Committee looking into the sale of Polaris Bank, said that the legislators had found evidence of significant adherence to the procedure during their study of various documents and the ongoing regulatory process on the acquisition.

According to a statement made by Osita Nwanisobi, Director of Corporate Communications at the Central Bank of Nigeria, on behalf of the CBN and AMCON, SCIL paid an upfront price of N50 billion to purchase 100% of Polaris Bank's shares. Additionally, they had agreed to the terms of the arrangement, which include paying back the N1.31 trillion in consideration bonds in full.

The statement claims that the CBN was given a quick return for the value it had built up in Polaris Bank during the stabilization phase and was also guaranteed the recovery of all money initially contributed to support the intervention.

“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 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 sale of the bank, according to CBN Governor Mr. Godwin Emefiele, completes a historic intervention by the CBN and AMCON in a key entity in the Nigerian banking industry. The approach, according to the governor, had given the CBN an unheard-of opportunity to recoup all of its intervention money and support inclusive growth and financial stability.

 In 2018, the CBN intervened to revoke the license of the defunct Skye Bank Plc and founded Polaris Bank to take over its assets and other liabilities, Polaris then operated as a bridge bank.

Consideration bonds with a face value of N898 billion (future value of N1.31 trillion) and a 25-year repayment schedule were injected into Polaris as part of the CBN intervention. The bank highlighted that the measures were taken to stop the bank's impending collapse, facilitate its stabilization and recovery, safeguard depositors' funds, avoid job losses, and maintain systemic economic stability.

Only two months after merely referring to press reports as speculations, the sale of the bridge bank has been officially announced. To be more specific, Polaris Bank released a statement in August denying any sales and labeling them as "speculative."

Along with the issue over the denials, the House of Representatives also ordered the CBN to suspend the sale of the bridge bank, saying that it must be open and competitive. The House declared that the suspension would last until all procedures had been completed by the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), and the Asset Management Corporation of Nigeria (AMCON).