EXCLUSIVE: As The Crisis Persists, Tinubu May Revoke The ‘Controversial’ Sale Of Polaris Bank.
Sale Of Polaris Bank
The destiny of Polaris Bank Limited is the subject of increasing speculation ahead of Nigeria’s anticipated political transition, with president-elect Bola Tinubu’s inauguration set for 29 May. The next leader is reportedly preparing to reverse the bank’s “controversial sale,” according to SURV.COM.NG
Recall that AMCON purchased Polaris Bank’s loans, leading to the bank’s nationalisation in September 2018. Right up to the takeover, it was known as Skye Bank.
Six legacy banks and two mergers had given rise to Skye Bank. When the share capital of banks was increased from N200 million to N500 million during the first banking reform in 1998, National Bank and Prudent Bank first merged.
When the share capital of banks was increased from N200 million to N500 million during the first banking reform in 1998, National Bank and Prudent Bank first merged.
Following a consolidation exercise that increased the capital base to N25 billion, National Bank merged with four other financial institutions in 2005 to form Skye Bank Plc: Bond Bank Limited, EIB International Bank Plc, Eko International Bank, owned by the government of Lagos State, Reliance Bank Limited, and Co-operative Bank Plc.
One of the merging institutions, Bond Bank, was created in 2000 by Tunde Ayeni, who is claimed to have had a considerable interest in the emerging bank. By 2010, Ayeni had become chairman of the board of Skye Bank.
The bank, which was primarily the banker of the Lagos State government, prospered throughout Ayeni’s first few years in charge. But in 2014, when the bank’s profit before tax fell to N10.5 billion and its profit after tax fell to N9.7 billion as opposed to N18.5 billion reported in 2013, things started to get worse.
The situation was going to get worse. 2014 was slated to be the final year the bank will make its annual report public. The bank lost N40 billion by June 2015, and its capital adequacy had fallen to just 10%—far below the minimum level of 16% for Systemically Important Banks (SIB), of which Skye was one.
Additionally, by December 2015, its share value had decreased by more than 55% (from N3.58 in June 2014 to N1.58 in December 2015). Its liquidity ratio had decreased to 8% from the minimum regulatory requirement of 30%. Its loan-to-deposit ratio was 98% compared to the recommended level of 80%.
Skye was falling freely. The outcomes were so poor that it was unable to submit its audited report for 2015. It had asked for a 4-week delay to file the report in March 2016, but it never did. Additionally, the market’s distress grew throughout the year. Analyst made sell suggestions.
Treasury Single Account (TSA) adoption put yet another fatal nail in the bank’s coffin. The bank has a high reliance on money from the public sector. TSA cost it an estimated N125 billion.
The CBN took up the hammer in June 2016 after having had enough. It removed the board and took over running the bank. To replace Timothy Oguntayo, it then named a new board with Muhammad Ahmad as the new chairman and Adetokunbo Abiru as the new group managing director.
According to insiders, Abiru, a stalwart of Tinubu, was appointed to head the bank to safeguard the interests of the president-elect.
The Economic and Financial Crimes Commission (EFCC) later filed a four-count criminal trust breach charge against Ayeni and Timothy Oguntayo, the bank’s former group managing director (GMD), before Justice Valentine Ashi of the Federal Capital Territory High Court, Apo, but the case appeared to have stalled.
Finally, the CBN decided to revoke Skye Bank’s licence on September 21, 2018. It established a bridging bank to assume its obligations and assets. Polaris Bank was founded on that bridge bank.
Abiru, however, left the bank in August 2020 to pursue his goal of becoming a senator, hoping to succeed Bayo Osinowo, the former congressman who represented the Lagos East Senatorial District and passed away in June 2020 after a brief illness.
Upon his departure, it was claimed that Abiru persuaded the president-elect to appoint Innocent C. Ike, the bank’s then executive director of technology & services who was seen as a loyalist, to supervise the bank’s operations on the condition that his interests would be safeguarded.
But to the surprise of the bank’s then management, Ike, BRAIN NEWS PAPER learned, was abroad when he learned of his dismissal, the bank’s takeover, and the appointment of Mr. Adekunle Sonola as its new managing director/CEO.
After investing more than N1.2 trillion in the bank, the CBN controversially sold it in October 2022 for a pitiful N40 billion. As was expected, it led to a flurry of accusations from MPs, unions, and other agreement sceptics.
According to reports, the apex bank sold the bank in late 2022 for about N40 billion to Strategic Capital Investment Limited (SCIL). SCIL is said to have been promoted by Auwal Lawan Abdullahi, Ibrahim Babangida’s son-in-law who, despite having little experience in banking and finance, holds the traditional title of Sarkin Sudan Gombe from the north-eastern state.
Despite being referred to as a commercial farmer in Gombe, Mr. Abdullahi’s public image appeared to be dominated by his extravagant 2017 wedding to Halimat, the last child and second daughter of Mr. Babangida, who led the dreadful military junta that ruled Nigeria from 1985 to 1993.
The sale meant that approximately 97% of the public investment in Polaris was lost by Nigerian taxpayers. According to business papers, AMCON’s investment in the bank was N848 billion as of December 2020, and according to insiders, N350 billion more was invested between January 2021 and July 2022.
Prior to the sale in October 2022, the House of Representatives gave the CBN explicit instructions to quickly halt the sale of the bank.
The suspension should last until the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), and Asset Management Corporation of Nigeria (AMCEN) have completed all procedures for an open, transparent, and competitive bid process, the house had decreed.
The Reps stated that it should follow best practises and protocol for this kind of divestment.
This came after Henry Nwauba (APGA-Imo) had won a motion of urgent public urgency.
In addition, prominent attorney Femi Falana wrote to the apex bank requesting specifics after hearing about the possible sale.
However, the bank’s sale was not halted by the efforts.
After completing a Share Purchase Agreement (SPA) for the purchase of 100% of the stock in Polaris Bank, the apex bank announced SCIL as the preferred bidder for the institution in late October 2022.
Since the acquisition plan was finished, there have been reports alleging that the divestment process violated the law.
But in a statement in January, the CBN said that the divestiture from Polaris Bank was overseen by a committee made up of senior AMCON and CBN representatives and supported by reputable legal and financial advisors. The CBN was represented by its immediate-past spokesperson, Osita Nwanisobi.
According to CBN, the divestment was carried out in accordance with pertinent legal requirements, international standards for bank resolutions, and necessary regulatory clearances.
Despite the apex bank’s clarification, controversy has persisted over the sale, and sources close to the former Lagos State governor’s camp told BRAIN NEWS PAPER that reversing the sale of the bank is likely to occur soon after inauguration on May 29, which is when power will be transferred to Tinubu. The ideas, if carried out, will put the struggling bank in even deeper trouble.
More is coming…
