House of Reps Asks CBN to Suspend Sale of Polaris Bank

Following several reports that the Central Bank of Nigeria (CBN) is planning to sell Polaris Bank Plc for N40 billion, the House of Representatives has directed an immediate suspension until due diligence is concluded.

The Nigeria's apex bank did not deny the plan to sell the bank for N40 billion after the government had invested over N1 trillion in it.

Recently, a report had showed a plot by Central Bank governor Godwin Emefiele to sell the bank which was nationalised with N1.2 trillion taxpayers’ funds in 2018 for a paltry N40 billion to Auwal Gombe, a son-in-law of a former military head of state, Ibrahim Babangida.

Following the report, renowned lawyer and a Senior Advocate of Nigeria (SAN), Femi Falana wrote to the apex bank demanding details of the proposed sale. The bank, however, in its reply did not deny it.

After several reports and the attendant outrage, the House of Representatives on Wednesday during plenary directed that the sale should be suspended, until the CBN, Nigeria Deposit Insurance Corporation and the Asset Management Corporation of Nigeria (AMCON) concluded all processes for an open, transparent, and competitive bid process.

The lawmakers insisted that the sale of the bank must follow the world best practices and procedure for divestment of this nature.

The News Agency of Nigeria reports that the suspension directive was sequel to the adoption of a motion of urgent public importance moved by Henry Nwauba (APGA-Imo) at the plenary.

He drew the attention of members to reports on social media in respect of the proposed sale of Polaris Bank for N40 billion.

Mr Nwauba said there was a need to ensure that the divestment in the bank did not jeopardise the core reason for the CBN intervention in the bank in the overall public interest.

He added that the divestment should be done transparently and must follow due process.

The lawmaker reminded his colleagues of the need to avert public outcry and untoward reaction from critical stakeholders in the economy, foreign business partners, banking community, depositors, and banks.

According to him, it is crucial to avoid the shortcomings of previous similar exercises undertaken in the past, noting that Polaris Bank was borne out of the bailout of the defunct Skye bank Plc that failed due to poor corporate governance and non-performing loan.

Giving reasons why the sale of the bank should be done the right way, the lawmaker said the defunct Skye Bank was an important bank with a large pool of employees, customers, and other stakeholders.

He said if the bank had not received a bailout and been allowed to go under, it would have had a ripple effect on the economy.

The House therefore set up an Ad hoc Committee to within 20 days, review the total outlay by the government in Polaris Bank and account for the entire financial input in the bank by the federal government.

The lawmakers said it should be done through the CBN, NDIC and AMCON to determine whether the conditions and terms of sale would likely ensure positive returns on public funds thus far committed to the bank, whether as bailout funds or other investments.

The House urged the committee to take action necessary to ensure that the public funds committed to Polaris Bank were appropriately documented and accounted for

Polaris Bank has been under the management of the debt recovery agency, AMCON since it was renamed and nationalised in 2018.

Skye Bank became bankrupt in 2016 and was unable to meet the recapitalisation requirements, leading to the intervention of the CBN. The top executives at the firm, Chairman, Tunde Ayeni; and the Managing Director, Timothy Oguntayo, were prosecuted for money laundering.

The Economic and Financial Crimes Commission (EFCC) had filed a N25.4 billion lawsuit against Ayeni and Oguntayo in 2019, but it was withdrawn in July 2022, after an alleged settlement that led to the forfeiture of cash and assets worth N15 billion.

Since the takeover of Skye Bank, now known as Polaris Bank, AMCON has been unable to sell the bank to new investors, with AMCON and CBN pumping about N848 billion of taxpayers’ money as of December 2020 into the firm.

Reports, however, say that an extra N350 billion has been invested in the commercial bank by the two government agencies in the last one and a half years. This means about 96% of the investment by AMCON will be lost if Polaris Bank is sold at N40 billion, when pegged at N848 billion, and 97% loss based on the total sum of N1.2 trillion reportedly invested by the government agencies.

October 12, 2022