Polaris Bank, which was recently acquired for N50 billion by Strategic Capital Investment Limited (SCIL), has a ‘checkered’ history marked by a series of financial woes and acquisitions.
Previously known as Mainstreet Bank, the defunct Skye Bank acquired the bank for N126 billion in October 2014 after emerging as the preferred bidder to an Asset Management Corporation of Nigeria (AMCON) bid.
However, Skye Bank’s journey after the acquisition was cut short when it faced financial difficulties, prompting the Central Bank of Nigeria to take over and sack its board in July 2016. As a result, the managing director, Timothy Oguntayo, the deputy managing director, and some members of management resigned.
The central bank then pumped up to N800 billion into the bank in an attempt to resurrect it.
The Central Bank of Nigeria and the federal government have invested close to N800 billion in this bank, at some point, it had to be seen to be owned by the CBN until we find investors that will be willing to pay a fair price for the business, CBN governor, Godwin Emefiefe, said at the time.
The measures were insufficient to save the bank, as the CBN revoked Skye Bank’s operating license in September 2018 and renamed it Polaris Bank. As a result, the bank was transferred to AMCON.
The CBN stated that the bank’s license was revoked because the results of its examinations and a forensic audit revealed that the bank required urgent recapitalization, as it could no longer live on borrowed time with indefinite liquidity support from the CBN. Even shareholders were unable to recapitalize the company.
Aside from the AMCON, the NDIC was also working to protect depositors’ funds at the time. The NDIC did this by implementing the bridge bank option, which allows the bank to continue operations while looking for potential investors and addressing other fundamental issues.
Alhaji Umaru Ibrahim, managing director of the Nigeria Deposit Insurance Corporation (NDIC), revealed that the bridge bank option was chosen because it was the most effective and efficient way to resolve the Skye Bank crisis with minimal impact on the fragile financial system and the economy in general. He also revealed that the bridge bank option saved the country from contagious risks that could have resulted in a gap in the financial system, the loss of over 6,000 jobs, and the disruption of banking services in the defunct bank’s 300 branches.
Despite all of this, the Nigerian Stock Exchange (NSE) suspended Skye Bank Plc’s shares in September 2018. The bourse announced this in a press release on its website.
According to the statement, the action was taken in response to the CBN’s revocation of Skye Bank’s banking license and by the Exchange’s rules regarding the suspension of trading in listed securities.
The NDIC disclosed Following the establishment of Polaris Bank Ltd, a total of N949.6 billion in deposits from 5.4 million depositors were safeguarded with over 6,000 jobs to ensure the continuity of banking operations in 227 branches nationwide, according to its annual report in August 2019.
Perhaps the latest acquisition by Strategic Capital Investment Limited (SCIL) will put an end to this perpetuity, but the blurry identity of the actors in the SCIL cocoon suggests otherwise. How much experience do they have in running a bank, and how much financial muscle can they muster to keep it running as a competitive going concern?
Acquisition Timeline
- October 2014: Mainstreet Bank sold by AMCON to Skye Bank for N26 billion
- July 2016: CBN sacks Board of Skye Bank
- September 2018: CBN revokes Skye Bank’s operating license
- September 2018: The Nigerian Stock Exchange suspended trading on Skye Bank shares
- CBN/AMCON change Skye Bank’s name to Polaris Bank
- October 2022: Polaris bank sold to Strategic Capital Investment Limited
