Polaris Bank, which was just acquired by Strategic Capital Investment Limited (SCIL) for N50 billion, has had a ‘checkered’ history characterized by a series of financial woes and acquisitions.
In an earlier incarnation as Mainstreet Bank, the bank got acquired by the defunct Skye Bank for N126 billion after it emerged as the preferred bidder to an Asset Management Corporation of Nigeria (AMCON) bid in October 2014.
But the journey was short-lived for Skye Bank after the acquisition as it ran into troubled waters, leading the Central Bank of Nigeria to take it over and sack its board in July 2016. This led to the resignation of managing director, Timothy Oguntayo, deputy MD and some members of management.
The murky history of Skye Bank’s transition from a child of banking consolidation to a merger gone sour is not lost on Nairametrics research. We present a timeline of events from our research.
Skye Bank emerges in 2005
Skye Bank Plc is a product of the merger of five legacy banks as a result of the banking industry consolidation and recapitalization exercise of 2005.
The legacy banks were Prudent Bank Plc, EIB International Plc, Bond Bank Limited, Reliance Bank Limited, and Co-operative Bank Plc.
Then CBN Governor, Charles Soludo moved the minimum capitalization requirements for banks from N2 billion to N25 billion. The move led to several mergers and acquisitions in the banking industry, as well as a rush to the capital markets to raise the required funds.
2014 – Skye Bank acquires Mainstreet
In November 2014, Skye bank won the bid to acquire a 100% stake in Asset Management Corporation of Nigeria (AMCON) in Mainstreet Bank Limited.
Mainstreet bank was the bridge bank formed from Afribank, which had its license revoked by the CBN.
The deal was thought to be worth about N126 billion and will see Skye Bank take over Mainstreet Bank from state-owned AMCON.
Mainstreet Bank has about 200 branches nationwide which will help Skye Bank consolidate its market share as a leading Tier 2 Bank and possibly challenge some Tier 1 bank. Mainstreet Bank also has nine cash centres and 200 Automated Teller Machines (ATMs) which Skye Bank will now own.
2016: CBN sacks Skye Bank board
Skye Bank fails to release its 2015 annual reports as rumours circle that the bank might be in financial trouble.
According to the Press Release, all the non-Executive Directors and independent directors resigned from the board of the bank.
In addition to that, the Managing Director of the bank, Mr. Timothy Oguntayo also resigned along with his deputy, Mrs. Amaka Onwughalu, and two other executive directors Mr. Dotun Adeniyi andMrs. Ibiye Ekong respectively.
The bank also announced that the CBN has approved the appointment of Alhaji M.K Ahmad as the new Chairman of the Board, while Mr. Tokunbo Abiru has been appointed as the new Group Managing Director and CEO. Messrs. Bayo Sanni, Idris Yakubu, Markie Idowu, and Abimbola Izu will continue in office as Executive Directors of the Bank.
The new board members were tasked with stabilizing the bank while also implementing actions to recapitalize the bank.
2018 CBN extends tenure of new board
The bank finally released its 2015 annual report showing the bank made an interest income of N127 billion, a loss after tax of N40.7 billion.
According to the CBN Governor, Godwin Emefiele, the reason for revoking the bank’s license was because it was unable to recapitalize despite billions of naira injected into the bank to stabilize it.
The central bank explained it had proceeded to pump as much as N800 billion into the bank in a bid to resuscitate it.
The bank was consequently transferred to AMCON who claimed they injected N786 billion into Polaris Bank Limited ahead of finding a new buyer.
The managing director of Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim revealed that the bridge bank option saved the country from contagious risks that could have led to a gap in the financial system, loss of more than 6,000 jobs, and disruption of banking services in the 300 branches of the defunct bank.
As all of this was happening, The Nigerian Stock Exchange (NSE) placed the shares of Skye Bank Plc on suspension in September 2018. The bourse made this known in a press release posted on its website.
Skye Bank reports a profit after tax of N19.4 billion in 2021 down from a profit of N28 billion in the Covid year of 2020. The bank’s total assets are about N1.3 trillion with loans and advances of about N260 billion.
2022: Polaris Bank Sale
In August 2022, a report emerged that the central bank had agreed to sell Polaris Bank to Auwal Lawan Abdullahi, a son-in-law to Ibrahim Babangida for N40 billion.
Meanwhile, in October, the house of reps issued a statement ordering a halt to the sale of the bank until the trio of CBN, NDIC and AMCON conclude all processes for the open, transparent, and competitive bid process.