The House of Representatives has asked the Central Bank of Nigeria (CBN) to suspend the planned sale of Polaris Bank Plc pending the conclusion of processes for an open, transparent, and competitive bid in line with best practice and procedure for divestment of this nature.
The House also mandated an ad hoc committee to review the total outlay by the Federal Government of Nigeria in Polaris Bank and account for the financial input in the bank by the Government through the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation (NDIC) and the Asset Management Corporation of Nigeria (AMCON).
Adopting a motion of urgent public importance by Rep. Henry Nwawuba, the lawmakers also want to determine whether the conditions for the sale were likely to ensure a positive return on public funds thus far committed to the bank, whether as bailout funds or other investments.
Moving the motion, Nwawuba drew attention to an information circulating in the social media on the proposed sale of Polaris Bank for N40billion.
He said the process of divestment from the bank should be done transparently and does not jeopardise the core reason for the CBN intervention in the bank.
He said it was 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.
According to him, 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.
He said the planned sale of the bank for a purported N40bn; amounts to just about four per cent of public funds invested in the bank, shrouded In secrecy and is Opaque and requires that it is done in transparency and accountability to eliminate insinuations of corruption.
He said “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 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 performance of the bank in the last three years shows that it has and improving consistently been recording profit, meeting obligations, performance ratios, the brand equity and public confidence have been enhanced with the relative stability of the bank.”
He said if the information in the public domain concerning the sale of the bank is true viz paltry proposed sale amount, lack of transparency, the reversal of the gains of the intervention would be eroded with some other consequences that would impact the economy negatively.
He warned against the sale of the bank that would in a way that will pose a threat to the stability of the Bank, adding that it should be done in a transparent way and contracted to well-known and reputable core investors with proven track records, in order to avoid a flight to safety action by the customers.
He said if it is not properly done, there is likely to be a 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.