Strategic Capital Investment Limited (SCIL) has acquired Polaris Bank. The Central Bank of Nigeria (CBN) and the Asset Management Company of Nigeria (AMCON) formally announced this last week. The acquisition was also backed by the Senate and House of Representatives Committees on Banking.
The purchase agreement accounts for 100% ownership of the equity in Polaris Bank by Strategic Capital Investment Limited (SCIL). The approval of the sale was concluded after fulfilling the requirements and getting presidential approval.
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Osita Nwanisobi, the CBN Director of Corporate Communications, disclosed that SCIL paid an upfront consideration of N50 billion to acquire the bank. He added that SCIL accepted the terms for full repayment of N1.305 trillion.
The idea is to ensure that CBN receives the return value it created for Polaris Bank during the stabilization period. This is also to recover the funds that were invested in supporting the intervention.
What intervention?
The CBN and Polaris Bank
Polaris Bank was formerly known as Skye Bank but was liquidated after alleged financial mismanagement by the top executives. The Central Bank of Nigeria (CBN) revoked the license but reissued it in 2018 under a new name, Polaris Bank. That was the birth of CBN and AMCON intervention to support the bank operations financially.
The House of Reps called CBN and AMCON to halt the idea of selling the bank during a resolution. That ensured a transparent and competitive bidding process and protected the public’s interest and investment.
The Adhoc committee was later directed to probe the sale process, which revealed that 35 companies were bidding for it. The interest buyers of Polaris Bank were later shortlisted to 15 and, eventually, 7.
After the shortlisting, the presidential approval was issued, and there was no longer concern over selling it. However, the investigation of the circumstances surrounding Polaris Bank continued.
How Was the Sale of Polaris Bank Coordinated?
The sale was coordinated by a Divestment 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. It was done to avoid negative speculations, retain value and preserve financial system stability.
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During the process, those who expressed interest in acquiring Skye Bank before CBN intervened in 2018 were invited to submit financial and technical proposals.
Eventually, all the submissions were thoroughly assessed, and SCIL emerged as the preferred bidder. They presented the most comprehensive purchase proposal and the best-rated growth plan for Polaris Bank.
What is Next for Polaris Bank?
That is very likely the question on the mind of everyone interested in this development. It’s been a long ride from being a Skye Bank to what it is today. So what exactly is next for Polaris Bank?
The CBN Governor, Mr. Godwin Emefiele, was quoted saying: ‘the sale of the bank marks the completion of a landmark intervention in a strategic institution in the Nigerian banking sector by the CBN and AMCON.’
According to the governor:
“The process has provided the CBN with an unprecedented opportunity to recover its intervention funds in full and promote financial stability and inclusive growth.”
He wished SCIL well as they implement growth plans to build the bank from the strong foundations that have been established.
But will the bank continue to answer Polaris? Can SCIL deliver on its masterpiece proposal promises? Will they meet up with the full repayment within the set period?
These are questions that only time can answer.
The Bottom Line
SCIL has acquired Polaris Bank, submitting the best proposal based on the financial and technical solution. A part of the consideration bond is to pay a future value of N1.305 trillion for the face value of N898 billion injected into the bank.
The sale of Polaris Bank was an action taken to prevent the bank’s imminent collapse and to ensure stabilization. It was also intended for recovery, protection of depositors’ funds, prevention of job losses, and preservation of systemic financial stability.
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