Mr. Godwin Emefiele, Governor of CBN

CBN clarifies sale of Polaris Bank followed due process

*The Central Bank of Nigeria restates the acquisition plan of Polaris Bank Limited was the most competitive as it provided taxpayers and the Federal Government with full recovery of its intervention fund, thereby achieving a successful, value-driven resolution of a strategic financial institution in the economy

Isola Moses | ConsumerConnect

Against the backdrop of a certain online publication alleging lack of due process in the transaction, the Central Bank of Nigeria (CBN) Wednesday, January 4, 2023, said the divestment from Polaris Bank was an institutional decision.

ConsumerConnect reports the CBN clarified the acquisition plan for the commercial bank was thoroughly supervised by the industry regulators as well as reputable legal and financial advisers, and no other party made a higher purchase offer as alleged in the publication.

It is recalled the Bankers’ Bank, October 2022, had announced the sale of Polaris Bank Limited to Strategic Capital Investment Limited (SCIL), four years after the government took over Skye Bank.

The CBN explained that commercial bank was later renamed, and over N1trillion of taxpayers’ money was subsequently injected into the bank.

The apex bank also announced SCIL as the preferred bidder for the lender after it completed a Share Purchase Agreement (SPA) for the acquisition of 100 percent of the equity in Polaris Bank.

However, following the completion of the  acquisition plan there have been reports alleging subversion of due process in the divestment process of Polaris Bank.

Restating the facts of the transaction, Mr. Osita Nwanisobi, Director of Corporate Communications at CBN, in a statement issued Wednesday, said the Bank needed to clear the air on the divestment process sequel to a “spurious, malicious, and misleading” online publication.

Nwanisobi stated: “Contrary to claims in the aforementioned online publication, the divestment from Polaris Bank was supervised by a Divestment Committee (Committee) comprising senior representatives of AMCON & CBN and supported by reputable legal and financial advisers.

“In addition, the divestment mode, process and decision received requisite board and regulatory approvals.”

The CBN stressed that no other party made a higher purchase offer as alleged by the publication.

The Director of Corporate Communications further said: “The entity in question, Fairview Acquisition Partners, had indicated an interest in acquiring two banks, including Polaris Bank, for a total sum of N1.2 trillion, an indicative offer which significantly discounted the existing N1.305 trillion debt owed by Polaris Bank to AMCON and so represented a material loss to the Federal Government.

“Notwithstanding, along with twenty-four (24) other parties, Fairview Acquisition Partners was invited by the financial advisors to participate in the sale process via the execution of a Non-Disclosure Agreement (NDA), the first stage of the process.”

The statement noted: “The financial advisors informed the Committee that Fairview Acquisition Partners neither executed nor returned the NDA despite verbally confirming receipt of the agreement and after follow-up from the financial advisors.

“Therefore, Fairview Acquisition Partners did not take the opportunity to update their offer by participating in the divestment process and thus did not make a binding purchase offer for Polaris Bank.”

The CBN explained the divestment was executed based on the relevant laws, global best practices for bank resolutions, and requisite regulatory approvals.

According to the Bank, the committee, along with its legal and financial advisers, conducted a rigorous technical and financial evaluation of the purchase proposals, assessing promoters’ fitness and propriety, offer price received and reserve price, funding structure and financial capacity, strategy and growth plans, among others.

“Following evaluation, the promoters of the strategic purpose vehicle, SCIL, emerged as the preferred purchaser, having presented the most comprehensive technical/financial purchase proposal and the highest-rated growth plans for Polaris Bank.

“In addition to passing all fitness and propriety tests, the promoters also made the highest financial offer for the bank, which was significantly above its core valuation and reserve price,” stated Nwanisobi.

The Bankers’ Bank said the SCIL’s binding offer involved an immediate upfront consideration of N50 billion and full responsibility for the debt of N1.305 trillion owed to AMCON, essentially a total purchase consideration of N1.355 trillion.

It stated: “This offer was the most competitive and provided taxpayers and the Federal Government with more than full recovery of its intervention cost.

“By the sale, the CBN and Federal Government achieved a successful, value-driven resolution of a strategic financial institution.”

Reaction to allegation of irregularity

The CBN said the online publication was curiously-timed, and it misrepresented the actual circumstances surrounding the sale of a strategic asset of the Federal Government of Nigeria.

The Bank said: “Its (publication) misleading statements are obviously intended to undermine the credibility of the divestment process.

“It also portends negatively on the stability of Polaris Bank and risks derailing the progress made by the monetary authorities.”

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