Sale of Polaris Bank: We followed due process — CBN
…Says Fairview did not make binding purchase offer
By Seun Ibiyemi
The Central Bank of Nigeria (CBN) has denied claims that a higher offer was made during the sale of Polaris Bank, saying that the divestment was an institutional decision that was thoroughly supervised.
The apex bank had, in October 2022, announced the sale of Polaris Bank to Strategic Capital Investment Limited (SCIL), four years after the government took over Skye Bank. The bank was later renamed and over N1 trillion was subsequently injected into the bank.
The bank also announced SCIL as the preferred bidder for the lender after it completed a Share Purchase Agreement (SPA) for the acquisition of 100 per cent of the equity in Polaris Bank.
Since the acquisition plan was completed, there have been reports alleging subversion of due process in the divestment process.
In a statement signed on Wednesday by the spokesperson of the CBN, Osita Nwanisobi, the apex bank said it felt the need to clear the air on the divestment process following a “spurious, malicious, and misleading” online publication.
“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 statement said that no other party made a higher purchase offer as alleged by the publication.
“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 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.”
CBN said the divestment was executed based on the relevant laws, global best practices for bank resolutions, and requisite regulatory approvals.
It also said 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, amongst 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,” the bank said.
It 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.
“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,” it said.
The CBN said the publication was curiously-timed and it misrepresents the circumstances surrounding the sale of a strategic asset of the federal government.
“Its 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,” the bank said.
