Reps direct CBN to suspend Polaris Bank sale over transaction loopholes

The House of Representatives has directed the Central Bank of Nigeria (CBN) to immediately suspend the proposed sale of Polaris Bank Plc. The House further ruled that the suspension should be in motion until the Asset Management Corporation of Nigeria (AMCON) and the Nigerian Deposit Insurance Corporation (NDIC) have completed all procedures necessary for an open, transparent and competitive bid process.

The Green Chamber’s decision followed allegations that the CBN plans to sell the commercial banking company, formerly known as Skye Bank, for N40 billion, a cheaper rate compared to the capital invested to resuscitate it.

Henry Nwajuba, a member of the House who moved the motion, considered to be of urgent public interest, noted that a viral social media trend had brought the sale of Polaris Bank for N40 billion to the public’s attention.

According to Nwajuba, the speculated amount is less than four percent of the money AMCON used to bail out the bank in 2018 following the inability of shareholders to adequately recapitalise the bank.

The lawmaker representing Mbaitoli/Ikeduru federal constituency of Imo State argued that the suspension becomes necessary to avert public outcry and untoward reaction from critical shareholders in the economy including foreign business partners, the banking community, depositors and correspondent banks.

“The sale of the bank for a purported N40 billion amounts to just about four percent of public funds invested in the bank. The proposed sale is shrouded in secrecy and is opaque and requires that it is done with transparency and accountability to eliminate insinuations of corruption,” he said.

Given the need to ensure that the divestment in the bank does not jeopardise the core reason for the CBN intervention in the bank in the overall public interest, Nwajuba stated that the divestment should be done most transparently to dispel rumours of corruption.

The legislator stressed that Polaris Bank’s performance in the last three years shows that it has consistently recorded significant profit, met obligations, with improved performance ratios. He added that the deposit and total asset size of the bank are over N1 trillion, making the bank a key player in the country’s economy.

The motion was passed by the lawmakers after it was put to a vote by Idris Wase, the presiding officer. Thereafter, the House resolved to set up an ad hoc committee to, within 21 days, review the total outlay by the federal government of Nigeria in Polaris Bank and account for the entire financial input in the bank by the federal government of Nigeria.

The committee is expected to determine whether the conditions and terms of sale are likely to ensure a positive return on public funds thus far committed to the bank, whether as bailout funds or other investments.

It would also make recommendations to the House of Representatives for any further legislative or other action necessary to ensure that the public funds committed to Polaris Bank are appropriately documented and accounted for.

The House also stated that the procedures should be done through the CBN, NDIC, and AMCON in order to ascertain whether the conditions and terms of the sale were likely to guarantee a profitable return on the public monies already invested in the bank, whether as bailout money or other types of investments.