Sale of Polaris Bank supervised by divestment committee – CBN explains

On Wednesday, the Central Bank of Nigeria (CBN) explained that Polaris Bank’s divestment was supervised by a divestment committee comprising senior representatives of Asset Management Corporation of Nigeria (AMCON) and CBN and supported by reputable legal and financial advisers.

This was disclosed in a statement titled ‘Sale of Polaris Bank: CBN Sets Record Straight’, and signed by Osita Nwanisobi, director, corporate communications, CBN.

“The attention of the Central Bank of Nigeria 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,” the statement reads.

“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.”

The apex bank referred the public to the statement dated October 20, 2022 by CBN and AMCON announcing the sale of 100 percent 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.

“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,” CBN said in the statement

“In addition, the divestment mode, process and decision received requisite board and regulatory approvals.”

According to the statement, at no time did any other party make a higher purchase offer as falsely claimed by the online publication.

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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 debts owed by Polaris Bank to AMCON and so represented a material loss to the federal government.

Notwithstanding, along with 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 CBN explained.

The statement said 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.

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.