CBN denies accusation of breach of process in sale of Polaris Bank

The Central Bank of Nigeria (CBN) has denied claims that a higher offer was made during the sale of Polaris Bank.

The apex bank, in a press release by its Director of Corporate Communications, Osita Nwanisobi on January 4, 2023, referred to the claim as spurious, malicious, and misleading. 

The release is in response to an online publication that claimed that another party made a higher purchase offer during the sale of the bank compared to the offer that was eventually accepted by the central bank.

The CBN said 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 release read:  

• “The attention of the Central Bank of Nigeria (CBN) has been drawn to a spurious, malicious, and misleading online publication, which made several false claims concerning the recent sale of the Federal Government’s interest in Polaris Bank Ltd. Given the potentially grave implications for the stability of the bank, financial sector and the Nigerian economy, the CBN is constrained to correct these inaccuracies.  
• “For the records, the public is referred to the statement dated October 20, 2022 by CBN & AMCON announcing the sale of 100% equity in Polaris Bank to a new core investor, Strategic Capital  Investment  Limited  (SCIL), wherein it  provided  copious  details  of  the  process  by which the sale was conducted.  
• “At no time did any other party make a higher purchase offer as falsely claimed by the online 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.  

The press release also addressed accusations that it did not consider the application of other potential bidders.

• “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.  
• “The divestment  was  executed based  on  the  relevant  laws,  global  best  practices  for  bank resolutions,  and  requisite  regulatory  approvals. 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 vs. reserve price, funding structure and financial capacity, strategy and growth plans, amongst others.”  
• See link to CBN’s denial.

The bank added that 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. It said 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.  

Backstory

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. 
• However, the terms of the deal has attracted several criticism from stakeholders who believe the deal was not transparent enough.