Polaris Bank, acquired by Strategic Capital Investment Limited (SCIL) in 2022 for N50 billion, has had a ‘checkered’ history characterized by a series of financial woes and acquisitions.
In an earlier incarnation as Mainstreet Bank, the bank was acquired by the defunct Skye Bank for N126 billion after it emerged as the preferred bidder to an Asset Management Corporation of Nigeria (AMCON) bid in October 2014.
But the journey was short-lived for Skye Bank after the acquisition as it ran into troubled waters, leading the Central Bank of Nigeria to take it over and sack its board in July 2016. This led to the resignation of managing director, Timothy Oguntayo, deputy MD and some members of management.
Skye Bank emerged in 2005
Skye Bank Plc is a product of the merger of five legacy banks as a result of the banking industry consolidation and recapitalization exercise of 2005.
The legacy banks were Prudent Bank Plc, EIB International Plc, Bond Bank Limited, Reliance Bank Limited, and Co-operative Bank Plc.
Then CBN Governor, Charles Soludo moved the minimum capitalization requirements for banks from N2 billion to N25 billion. The move led to several mergers and acquisitions in the banking industry, as well as a rush to the capital markets to raise the required funds.
2014 – Skye Bank acquires Mainstreet
In November 2014, Skye Bank won the bid to acquire a 100% stake in Asset Management Corporation of Nigeria (AMCON) in Mainstreet Bank Limited.
Mainstreet Bank was the bridge bank formed from Afribank, which had its license revoked by the CBN.
The deal was thought to be worth about N126 billion and will see Skye Bank take over Mainstreet Bank from state-owned AMCON.
SEC approved the deal in December of that year making Skye Bank the official owner of Mainstreet Bank.
Mainstreet Bank has about 200 branches nationwide which will help Skye Bank consolidate its market share as a leading Tier 2 Bank and possibly challenge some Tier 1 banks. Mainstreet Bank also has nine cash centers and 200 Automated Teller Machines (ATMs) which Skye Bank will now own.
2016: CBN sacks Skye Bank board
Skye Bank failed to release its 2015 annual reports as rumors circle that the bank might be in financial trouble.
However, on July 4th, a press release on the Nigerian Exchange confirmed the CBN had dissolved the board and management of Skye Bank Nigeria Plc.
According to the Press Release, all the non-executive Directors and independent directors resigned from the board of the bank.
In addition to that, the Managing Director of the bank, Timothy Oguntayo also resigned along with his deputy, Mrs. Amaka Onwughalu, and two other executive directors Mr. Dotun Adeniyi and Mrs. Ibiye Ekong respectively.
The bank also announced that the CBN has approved the appointment of Alhaji M.K Ahmad as the new Chairman of the Board, while Mr. Tokunbo Abiru has been appointed as the new Group Managing Director and CEO. Messrs. Bayo Sanni, Idris Yakubu, Markie Idowu, and Abimbola Izu will continue in office as Executive Directors of the Bank.
The new board members were tasked with stabilizing the bank while also implementing actions to recapitalize the bank.
2018 CBN extends tenure of new board
The bank finally released its 2015 annual report showing the bank made an interest income of N127 billion, a loss after tax of N40.7 billion.
In a notice sent to the Nigerian Stock Exchange (NSE), Skye Bank announced that the Central Bank of Nigeria (CBN) has renewed the mandate of the Bank’s Board of Directors for an additional two-year term till the 30th of June 2020.
The apex bank in April 2017 year extended its financial support for the bank till the end of 2018. Over N100 billion has been injected into the bank.
The management also claimed at the time that it had taken stringent measures against its debtors, including reportedly writing to the Presidency for assistance in recovering funds from its former Chairman Tunde Ayeni.
Four of its local subsidiaries were also sold for a total of N6.2 billion and the bank was in the process of divesting from its other subsidiaries.
2018: CBN revokes the license of the bank
In September 2018, the central bank announced the revocation of the operating license of Skye Bank stating it was with immediate effect.
According to the CBN Governor, Godwin Emefiele, the reason for revoking the bank’s license was because it was unable to recapitalize despite billions of naira injected into the bank to stabilize it.
The central bank explained it had proceeded to pump as much as N800 billion into the bank in a bid to resuscitate it.
The bank was consequently transferred to AMCON who claimed they injected N786 billion into Polaris Bank Limited ahead of finding a new buyer.
The managing director of Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim revealed that the bridge bank option saved the country from contagious risks that could have led to a gap in the financial system, loss of more than 6,000 jobs, and disruption of banking services in the 300 branches of the defunct bank.
As all of this was happening, The Nigerian Stock Exchange (NSE) placed the shares of Skye Bank Plc on suspension in September 2018. The bourse made this known in a press release posted on its website.
2020: Tokunbo Abiru retires from Polaris Bank
Tokunbo Abiru retires effective August 31, 2020, having completed his second two-year tenure at the helm of the Bank.
When he left the bank reported a profit after tax of N27 billion in 2019 full-year results and had reported half-year unaudited profits of N18 billion in 2020 a COVID-19 pandemic year.
Meanwhile, FBN Holdings confirms there were ongoing merger talks between its main subsidiaries — First Bank of Nigeria Ltd, Polaris Bank Ltd, and Heritage Bank Plc. But concluded no decision had been made.
Skye Bank reports a profit after tax of N19.4 billion in 2021 down from a profit of N28 billion in the Covid year of 2020. The bank’s total assets are about N1.3 trillion with loans and advances of about N260 billion.
2022: Polaris Bank Sale
In August 2022, a report emerged that the central bank had agreed to sell Polaris Bank to Auwal Lawan Abdullahi, a son-in-law to Ibrahim Babangida for N40 billion.
Polaris Bank and NDIC denied the report, claiming no such decision has been made.
Meanwhile, in October, the House of Reps issued a statement ordering a halt to the sale of the bank until the trio of CBN, NDIC, and AMCON conclude all processes for the open, transparent, and competitive bid process.
On October 21st, the CBN announced the completion of the sale of shares in Polaris Bank to Strategic Capital Investment Limited (SCIL) for N50 billion. The sale also requires the new owners to repay CBN’s N1.3 trillion bond in the bank
On the same day, Strategic Capital Investment announced the appointment of a new board of directors. They named Alhaji MK Ahmad (Chairman) and Mr. Adekunle Sonola (Executive – MD/CEO).
2024 – The Latest Turn of Events
2024 – Central Bank’s Bold Move: In a surprising development, the CBN sacked the board of Polaris Bank, a decision that underscores the continuing challenges and regulatory concerns in the bank’s operations. The CBN also sacked the board of Titan Trust Bank and Union Bank explaining its decision as follows;
This action became necessary due to the non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of the Banks and Other Financial Institutions Act, 2020. The Bank’s infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability, among others.”