•‘Ahmad lacks moral right to lead new board’
Shareholders who had invested in the legacy bank that metamorphosed into Polaris Bank have decried the sale of the bank as a major letdown for the minority retail shareholders.
Shareholders said the takeover of the legacy bank and last week’s sale of Polaris Bank without consideration for the hard-pressed shareholders was a disincentive to efforts to deepen domestic participation in the stock market.
They also expressed displeasure at the continuing choice of Mr. Muhammad Ahmad as the chairman of the bank, lamenting that he played on the trust bestowed in him by the minority shareholders at the onset of the bank’s crisis.
Ahmad was first appointed by the Central Bank of Nigeria (CBN) to address observed corporate governance lapses at the onset of the bank’s crisis in July 2016. The bank was then a publicly quoted company with thousands of minority shareholders.
The apex bank and Asset Management Corporation of Nigeria (AMCON) last week announced 100 per cent sale of Polaris Bank to Strategic Capital Investment Limited (SCIL), a nondescript company owned by Auwal Lawal, an in-law to former military head of state, Gen Ibrahim Babangida (rtd).
President, Pragmatic Shareholders Association of Nigeria, Mrs Bisi Bakare, expressed disappointment that the apex bank went ahead to conclude such sale without any consideration for minority, non-management shareholders.
“Of course as former shareholders of Skye Bank, all the investing public, we are not happy with what happened to our investments in Skye Bank. It’s very sad. It’s just very unfortunate that CBN governor is doing all this, he forgets that one day he will leave the post,” Bakare said.
She said it was also disappointing that it was under the current leadership of the CBN that such sordid deal was wrapped through noting that Emefiele had been the managing director of a publicly quoted bank and knew better the intricacies around minority shareholdings.
Shareholders’ activist, Alhaji Gbadebo Olatokunbo, called for changes in existing laws to protect minority shareholders as all shareholders are categorised as owners of the company whereas the reality is that the majority shareholders determine the fate of every company.
He noted that shareholders had suffered huge losses under the transitional period of Skye Bank to Polaris Bank, pointing out that minority shareholders had initially suffered losses under the mergers and acquisitions that birthed Skye Bank.
He lamented the aloofness of the CBN as the regulator of the banking sector to the plight of minority shareholders, adding that the apex bank was complicit in the failure of bank as minority shareholders relied on the apex bank’s scrutiny of banks’ financial statements to invest in banks.
“Let us reflect as ordinary shareholders and wonder why it’s only investors that suffer whenever there is failure, despite the fact that we have less powers to exercise over the banks, unlike that of the CBN, Securities and Exchange Commission (SEC), Nigerian Exchange (NGX) and others. Therefore, the national assembly has a responsibility to look into the laws and make necessary changes to protect and compensate vulnerable shareholders,” Olatokunbo said.
According to him, since the apex bank regulates the banks and also collects fines from banks, then the CBN must not go free whenever there are problems, but must also be sanctioned and such sum should be distributed to the minority shareholders of such entity and the same sanction should be applied to other regulatory agencies that are stakeholders.
He pointed out that failures of banks without compensation to minority shareholders were the main reasons several investors have shunned the banking industry and the entire stock market since the 2009 collapse till date.
He called for forensic audit of the entire Skye Bank and Polaris Bank transactions, noting that several shareholders have lost their lifetime fortunes due to the transactions.
“The shareholders in Nigeria have been taken for a ride for too long and the issue of total lost in the case of failure of companies must be seriously looked into, because we don’t run the companies on daily basis, while the offenders were mostly the management and boards,” Olatokunbo said.
He said the audit committee, which is often cited as empowering minority shareholders to control company’s affairs, has its limitations because it is somehow subservient and dependent on the board of directors.
“The regulatory agencies like CBN have more power to proactively deal with the failures in banks because they check the books of the banks, give approvals to the banks’ policies and operations among others,” Olatokunbo said.
Former publicity secretary of Independent Shareholders Association of Nigeria (ISAN) , Mr. Moses Igbrude said the sale of Polaris Bank without compensating the minority shareholders who had suffered losses was a huge discouragement to local investors.
“I am appealing to those concerned that they should consider ways to get the ordinary shareholders involved; the Federal Government should not overlook us. I am also appealing that Federal Government should include in the sale agreement a clause that the bank should be listed as a public limited liability company on the floor of the Exchange’’.
Read Also: CBN, AMCON announce sale of Polaris Bank
“Selling a national asset without considering it long time sustainability is not a good idea, so a clause like this will subject the bank accounts to public scrutiny by getting other investors involved through the capital market,” Igbrude said.
Chairman, Ibadan Zone Shareholders Association (IBZA) , Mr Eric Akinduro, said when one looked at the situation that surrounded the bankruptcy of former Skye Bank that metamorphosed to Polaris Bank in 2018, the CBN has not be fair to Nigerian retail shareholders.
“CBN appointed the board to run the bank and nothing was done till it was taken over by them. Since 2018, the bank was not able to meet up and eventually they sold it to a Strategic Capital Investment Ltd that just registered in April 2022. What precedent or banking success story displayed by the new buyer? ,” Akinduro said.
According to him, good corporate governance is all about effectively supervising the management of a company to uphold the company’s integrity.
“Due diligence was not properly carried out. The urgency and secrecy in the sale are quite questionable. The bank was bought for N1.35 trillion and only N50 billion was paid, what happened to the balance?. My conclusion to this is that the ‘powers that be’ is at play here and this will never help our investment community and economy as a whole,” Akinduro said.
Meanwhile, President Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr Faruk expressed support for the sale of Polaris Bank saying the apex bank followed due process.
“I fully support the sale of Polaris Bank because the Central Bank of Nigeria followed due process , just like the process that led to the sale of Union Bank to Titan Group . I firmly believe the new owners will add tremendous value to the bank in view of their financial exposure and the success of their other investments,” Umar said.
He urged customers “not to be deterred by the current discussion on the ownership as the new owners are people of high integrity and will improve the fortunes of the bank as soon the takeover of the bank is completed”.
Other shareholders who spoke under condition of anonymity said the continuation of Mr. Muhammad Ahmad as the chairman of the bank was inappropriate citing his historical interest in the transitional crisis management period.
The apex bank had on July 4, 2016 taken over the management of the Skye Bank by reconstituting the board of directors and management of the bank to pave way for a new team to take charge of the bank and resolve various issues that were perceived to be hindering its optimal performance. The apex bank then gave the new board and management a clear mandate with particular focus areas to turn the institution around positively. Ahmad was at the head of the team as the chairman of board of directors.
The CBN then in July 2018 extended the tenure of the board of directors and management of Skye Bank for another two years till June 30, 2020. The apex bank attributed the extension of tenure to “stellar performance of the board”.
Ahmad, the founding director general of the National Pension Commission (Pencom), who was appointed by the CBN as the new chairman of the then Skye Bank, had during a working visit to the then Nigerian Stock Exchange (NSE) assured the investing public of the safety of their investments.
He had said the reconstitution of the board of the bank by the CBN was not a takeover but an intervention to correct observed corporate governance issues under the old board.
While explaining that the ownership of the bank remains in the hands of the shareholders, Ahmad said the CBN does not own the bank and has not taken over the bank, stressing that the apex was fully behind the bank and would support it to fully stabilize.
He reassured the bank’s customers and investors that the bank was not distressed but only had corporate governance issues under the old board adding that the bank’s fundamentals remain strong and it remains one of Nigeria’s leading and retail banks.
Mr. Tokunbo Abiru, a former commissioner for finance in Lagos state and executive director at First Bank of Nigeria, who was appointed as the new group managing director, also corroborated Ahmad.
Abiru said the management team and the board would work to achieve value enhancement for shareholders, customers and other stakeholders by bringing the cost-income ratio to acceptable levels, improve the risk assets quality and work towards increasing the liquidity and capital adequacy of the bank.
That assurance boosted the hopes of several shareholders and kept Skye Bank as actively trades stock. With no profit warnings, no suspension due to delay in results, no cautionary statements and any such alerts that are required by extant rules and regulations in terms of any material change; shareholders continued to trade on the troubled Skye Bank till the moment of liquidation of the bank by the apex bank.
SCIL last week immediately reconstituted the board and management of Polaris Bank, retaining Ahmad as the chairman of the new board and management.