The Central Bank of Nigeria, CBN has announced that it has an conjunction with the Asset Management Company of Nigeria (AMCON) completed a Share Purchase Agreement (SPA) for the acquisition of 100% of the equity in Polaris Bank by Strategic Capital Investment Limited (SCIL).
The announcement contained in a statement signed by CBN Director, Corporate Communications Department, Osita Nwanisobi followed an approval of the House of Representatives on Wednesday for the sale of the bank.
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In its approval, the House of Representatives noted that the acquisition followed the laid down procedures and the relevant presidential approval.
The CBN had in 2018 intervened in Skye Bank Plc, revoked it’s license and established Polaris Bank to assume it’s assets and certain liabilities. It went on to inject ₦898 billion (face value) into Polaris Bank through AMCON in the form of a bond repayable over a 25 year period.
According to the statement by the Spec Bank, SCIL paid an upfront consideration of ₦50 billion to acquire 100% equity of the Polaris Bank.
SCIL also accepted the terms of agreement for the SPA, including the full repayment of the future value of the bond, being ₦1.305tn.
The statement reads: “The Central Bank of Nigeria (CBN) and the Asset Management Company of Nigeria (AMCON) are pleased to announce the completion of a Share Purchase Agreement (SPA) for the acquisition of 100% of the equity in Polaris Bank by Strategic Capital Investment Limited (‘SCIL’).
“Polaris has been operating as a bridge bank since 2018 when the Central Bank of Nigeria intervened to revoke the licence of the former Skye Bank Plc. and established Polaris Bank to assume its assets and certain liabilities.
“As part of the CBN intervention, consideration bonds with a face value of N898 billion (future value of N1.305 trillion) was injected into the bridge bank through AMCON, to be repaid over a 25-year period.
“These actions were taken to prevent the imminent collapse of the bank, enable its stabilisation and recovery, protect depositors’ fund, prevent job losses and preserve systemic financial stability. SCIL has paid an upfront consideration of N50 billion to acquire 100% of the equity of Polaris Bank and has accepted the terms of the agreement which include the full repayment of the sum of N1.305trillion, being the consideration bonds injected.”
The statement added, “The CBN thus received an immediate return for the value it has created in Polaris Bank during the stabilisation period, as well as ensuring that all funds originally provided to support the intervention are recovered.
“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 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.”
Investogist reported in 2020, that in the full year following the establishment of Polaris Bank, the banking group reported a gross earnings of ₦147bn for the financial year ended 31 December 2019. It’s profit for the period was ₦26.29bn, while it held an asset worth ₦1.16 billion.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur