Tayo Busayo


DAILY COURIER – The House of Representatives, on Wednesday, directed the Central Bank of Nigeria (CBN), to immediately suspend the sale of Polaris bank.


The resolution followed the adoption of a motion sponsored by the Chairman, House Committee on Legislative Agenda, Henry Nwawuba, who frowned at the ridiculous sum of N40 billion placed on the bank.


The House also stressed the need for the review of total outlay by the Federal Government in Polaris Bank and account for the entire financial input in the bank by the Federal Government of Nigeria through the Central Bank of Nigeria, Nigeria Deposit Insurance Corporation (NDIC) and Asset Management Corporation of Nigeria (AMCON).


In his lead debate, Hon. Nwawuba said: “the House is aware that public attention has been drawn through a circulation currently on social media in respect of the proposed sale of Polaris Bank for N40 billion.


“The House is aware further that given the need to ensure that the divestment in the bank does not jeopardize the core reason for the CBN intervention in the bank in the overall public interest, the divestment should be done most transparently following the required due process.


“The House is cognisant of the fact that this is necessary to avert public outcry and untoward reaction from critical stakeholders in the economy, foreign business partners banking community, depositors, Correspondent banks, etc. as it is also crucial to avoid the shortcomings of the previous similar exercise undertaken in the past.


“The House recalls that Polaris Bank is borne out of the bailout of the defunct Skye bank Plc that failed due to poor corporate governance and non-performing loan for which a whooping sum of close to a trillion naira of public fund was committed to resuscitating the bank.


“The House is dismayed that the sale of the bank for a purported N40 billion, amounts to just about 4 percent of public funds invested in the bank.


“The House is dismayed further that the proposed sale is shrouded in secrecy and is opaque and requires that it is done in transparency and accountability to eliminate insinuations of corruption.


“The House is aware that the transited defunct Skye Bank was a systemically Important Bank with a large pool of employees, customers, and other stakeholders for which the failure of the bank without a bailout would have had a serious contagion effect on the economy and global perception/reputation.


“The House is aware further that the resuscitation of the entity through the formation of Polaris Bank to acquire the assets and certain liabilities of the defunct Skye Bank was aimed at returning the value that will upset the public fund injected into the bank as capital, protect jobs and continue to contribute to the economic development of Nigeria.


“The House is mindful that the performance of the bank in the last 3 years shows that it has consistently been recording profit, meeting obligations, and improving performance ratios.


“The House is mindful further that in addition, the brand equity and public confidence have been enhanced with the relative stability of the bank.


“The House is alarmed that, should the information being passed around concerning the sale of the bank in the public be true viz paltry proposed sale amount, lack of transparency, etc, the reversal of the gains of the intervention would be eroded with some other consequences that would impact the economy negatively, some of which are: Threat to the stability of the Bank: If the sale is not seen to be transparent and contracted to well-known and reputable core investors with proven track records, it would trigger a flight to safety action by the customers with an attendant run on the bank.


“Relationship strain with foreign bilateral institutions and correspondent banks with the attendant impact of the inability of the bank to consummate trade transactions on behalf of customers and settle international transactions.


“Funding challenges: Retention and generation of liability by the Bank post announcement would be a major issue as some of the bank’s current major fund providers would recall their funds while there will be difficulties in attracting new funds. Specifically, most of the major fund providers would adopt a ‘wait-and-see’ approach in dealing with the bank.


While stressing the need to deepen banking sector confidence and avoid misfortune that could trigger the worsening of unemployment in the economy, Nwawuba warned that: “Given the total assets of the bank in question, which is more than N1 trillion, any issue affecting the bank could have a contagion effect on the entire financial system.


“The House is persuaded that to this end, due care needs to be taken to avoid any untoward backdrop as it is on record that the regulatory intervention in the bank has yielded the desired result judging from testimonies by some stakeholders and the bank’s performance to-date which is as listed thus: full settlement of all bilateral obligations (Foreign & Local) inherited from their legacy bank.”


The lawmaker, who applauded the National Assembly’s intervention towards the recovery of trapped TSA-related funds inherited from their legacy bank in the past, posited that: “it has been confirmed that the bank has met all its obligations under the scheme and has assumed compliant status.


“The bank now commands an acceptable brand in the market and maintains the stability of the bank’s operations as a normal bank. The bank is on the path to sustained profitability.


“The published financial statements in the last 3 years show improved prudential ratios which are largely in compliance with regulatory requirements. The bank is a challenger in the banking space, profitable with visibility through brand enhancement.


“The bank has developed a notable digital footprint and is an awarding-winning bank in the digital banking space.


“The deposit and total asset size of the bank are more than N1 trillion thereby making the bank a key player in the economy.


“The House is convinced that given the above, and especially the urgent need for the confidence in the bank and Nigerian financial sector which was restored by the CBN intervention and which the bank and sector currently enjoys is not lost”, Nwawuba noted.


The House also mandated the 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 through the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation (NDIC) and the Asset Management Corporation of Nigeria (AMCON).


The Committee was also mandated 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; and make recommendations to the House for any further legislative or other action necessary to ensure that the public funds committed to Polaris Bank are appropriately documented, accounted for and made good on.