Following the announcement of the sale of Polaris Bank Limited earlier today, there have been mixed reactions from experts and stakeholders.
As expected, some minority shareholders have frowned at the development, describing it as ‘an illegality’, for which they said they are prepared to seek redress in court.
In case you missed the details, the Central Bank of Nigeria and AMCON announced the completion of the sale of Polaris Bank’s entire shares to Strategic Capital Investment Limited (SCIL). The apex bank said SCIL paid the upfront transaction fee of N50 billion, and in accepting the terms will repay fully the sum of N1.305 trillion being the consideration bonds injected by the CBN over 25 years.
Here’s what the shareholders are saying
Reacting to this development, Mr Boniface Okezie, the national coordinator of Progressive Shareholders Association, said this to Nairametrics:
“My view is that the sale was illegal. CBN needs to bring back the bank to its original owners, which are shareholders. The CBN has been flaunting every law in the land by perpetuating illegality because the government of the day has been operating a dictatorship. If the CBN has been working on democratic principles they would have paid the shareholders who are original owners before selling the bank.
“I am sure that this sale violates shareholders’ rights and it is going to be a subject of litigation. We are going to challenge it in the law court; CBN and AMCON must put this at the back of their mind because they are not the owners to dispose of the bank’s assets.
“If you are selling institutions that you legitimately acquired nobody will challenge you in court, but the Polaris Bank is not owned by CBN or AMCON, that’s why it is going to be subject of litigation when this current administration of Buhari exits.
“The CBN aided Sky Bank to acquire Mainstreet Bank, knowing full well that Sky Bank had insufficient funds to acquire the bank. They utilized the little shareholders’ fund they had to make the acquisition, which later consumed them. This was the genesis of Sky Bank’s crisis that forced the CBN to take over the bank and christened it Polaris Bank.
“Even the CBN governor, Emefiele, confirmed that Sky Bank did not have sufficient shareholders’ funds to make the acquisition and promised to look into the matter and pay compensation to the shareholders, which they never fulfilled till today.
“This is a wrong signal to foreign investors because they will be sceptical about coming to own an institution or company in Nigeria due to the safety of their investment. Government policies are not favourable for business in the country. If the government can take over assets that belong to the citizens, they can as well do worst to the foreigners”.
The Chairman, of Issuers and Investors Alternative Dispute Resolution (IIADRI), Mr Moses Igbrude, said:
“My position on the sale is that the government should have a human face. This is a business run down by major shareholders, how will they compensate the minority shareholders? The truth must be told, auditors who gave a clean slate on the account of the bank and the directors who messed up the bank should be taken to court by the minority shareholders.”
However, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE) and former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr Muda Yusuf, said the CBN’s action was right. He said the apex bank’s action is in defence of the industry as it is based on the framework that prevents the collapse of any bank. According to him, if any bank goes down, the implications can go beyond just the shareholders as it would have implications for depositors, employees and other people that have invested in the bank. He said it also has implications for the reputation of the industry.
Yusuf said one of the positive things in the industry over the last several years is that no bank has been allowed to go into liquidation. Instead, whenever a bank shows signs of weakness, the CBN has a framework in place to prevent it from going down completely.
“That is the spirit behind bridge banks. That is better for depositors, and it is better for the economy – it is good for the economy, good for financial stability, and good for the confidence of investors-that no matter which bank you are there is an assurance that the bank will not be allowed to go under,” Yusuf explained.
Speaking further, Yusuf explained that “when a bank is showing signs of weakness or bad management we should be determined to know where such weakness is coming from, and there have to be consequences.”
Also speaking with Nairametrics, Professor Tayo Bello of Adeleke University said The CBN, based on its mandate, will always defend and protect the interests of depositors. He said if any bank should go under, it would affect the entire economy as the banking system is interconnected. Bello said the shares of the affected bank may be affected temporarily, but the action of the CBN builds confidence in the banking industry.