Polaris Bank on Firm Ground

Goddy Egene writes that the recapitalisation of Polaris Bank Limited with N786 billion amongst other rescue intervention in defunct Skye Bank appears to have paid off

When news of the revocation of the operating licence of the defunct Skye Bank by the Central Bank of Nigeria (CBN), broke on Friday, September 21, it was like yet another banking sector “tsunami” was about to sweep through the Nigerian banking ecosystem again with palpable fears amongst majority of the bank’s customers as well as employees of the bank.

Despite assurances of no loss of jobs and safety of depositors’ funds by the CBN, the Nigeria Deposit Insurance Corporation (NDIC) and Asset Management Company of Nigeria (AMCON), and the announcement of incorporated bridge bank, Polaris Bank Limited, to absorb the assets and liabilities of the former bank, customers in particular were nevertheless still apprehensive and not convinced.

Here’s the reaction of a customer of defunct Skye Bank: “My sister called me that Friday evening, her voice shaky. She asked if I had heard the news and I said yes. She was distraught because she had opened an account for her 16-year-old son in the bank when he was four. The money in the account was substantial, and the plan was to fund the boy’s tertiary education. I told her that the CBN had assured safety of customers’ deposits, but she was still worried. ‘I will go to the bank first thing on Monday morning and clear the account,” she vowed.

True to her word, she was first on the queue at her branch on Monday, September 24 but after relating with her account officer, she realised that she had been fretting for nothing.
“The account is still intact with the new Polaris Bank,” Adeolu Ajayi, another customer with the bank who had knowledge of the story told THISDAY.

Like his sister, Ajayi’s company’s corporate and employee salary accounts are also with the bank. He had also gone to his branch same Monday post revocation of Skye Bank’s licence, and having been assured of the safety of his money by his account officer, he only made a small withdrawal contrary to his prior decision to close down the account.

Unexpected news

Nobody expected the withdrawal of Skye Bank’s operating licence and the fact that the regulatory action came on a Friday only heightened fears.

CBN Governor, Godwin Emefiele, who broke the news to journalists at a press conference in Lagos, though assured depositors that their funds were safe. Emefiele, who jointly briefed journalists alongside Managing Director of the NDIC, Umaru Ibrahim and that of the AMCON, Ahmed Kuru, gave detailed explanations for the action taken on Skye Bank.

He said the regulatory action taken on the bank was a follow up to earlier action the CBN took in July 2016 over operational lapses including poor corporate governance, and liquidity and solvency challenges. The CBN governor disclosed that the latest move was taken to stop Skye Bank relying on the apex bank’s intervention to remain afloat and that considering the credible performance of the management installed after the July 4, 2016 action, they would stay in charge of the new Polaris Bank.

He said: “Given the good performance of the board and management, the CBN shall retain them. In addition, all employees of Skye Bank shall be absorbed by Polaris Bank under a new contract unless an employee decides to opt out.”

The journey so far

Almost a month after the CBN’s action and the emergence of Polaris Bank, it is noteworthy that the new institution is sure-footedly on the path of stability and sound business ethics.
The injection of a new sum of N786 billion into Polaris Bank by the NDIC has been a safety assurance for depositors’ funds while the retention of the experienced management and operational teams has also boosted customers’ confidence in the new bank. All accounts and records of depositors have been automatically and successfully migrated from the old Skye Bank to Polaris Bank, and customers have been enjoying uninterrupted and seamless banking transactions.

Mrs. Anu Edun, a customer at Alausa, Ikeja branch of Polaris Bank, said she has no reason to stop using the bank. She said: “I initially resolved to close my account and move on, but I realised that there is no cause for worry because normal and uninterrupted operations have resumed since September 24, in all the branches now absorbed by Polaris Bank. I have been able to operate my account normally, and I have seen others doing so too. So, I will continue using the bank. My only prayer is that the process of getting new investors should be speedily completed.”

The Naysayers

Despite the assurances from the CBN and the best efforts of management and staff, Polaris Bank has not been without its critics. Some have claimed that it was not appropriately registered as at the time the CBN announced its formation and that the apex bank had something to hide. However, incorporation documents from the Corporate Affairs Commission (CAC) confirm that Polaris Bank Limited was duly incorporated on September 14, 2018, as a legal entity authorised to offer banking and financial services. Its registration number on the CAC Register is RC 1525101. The CAC further affirmed this in a statement issued on September 24, 2018.

In spite of the explanation from the CBN, some other commentators have also queried why the Mr. Tokunbo Abiru-led management was retained, asking it to account for investors,’ funds. But having found them proficient in the efficient manner they piloted the affairs of Skye Bank since July 2016 when they were first appointed, the CBN found no ground to stop them from continuing the good works they have been doing, more so as the collapse of Skye Bank was not in anyway connected with their time in office as the real harm had been done prior to their assumption of office.

On the issue of shareholders of the defunct Skye Bank, the regulators , including CBN, NDIC and AMCON, said they are handling that. According to them, Polaris Bank is a nationalised bank under their supervision.

A bright future

Though it is early days yet, the omens are good for Polaris Bank, with management and staff whose job security are already assured, pulling in the same direction to ensure business continuity, profitability and overall success of the new bank.

Speaking on plans for Polaris, Abiru disclosed that, “What we see in the future is a bank that, in the next three to five years, is one of the first five banks in Nigeria; a fully-fledged retail bank with strong digital backing. So, our stakeholders will get more of enhanced values which are different from the bank of the past.”

“What we see in the next five years is a stronger retail and commercial bank with an underpinning for digital transformation. I see a major transformation of the bank. Part of the initiatives we continued to deliver following the July 2016 regulatory intervention includes stabilising the institution, entrenching sound corporate governance and risk management practices, and the restoration of depositors’ confidence.”

A month after its intervention, the decision of the CBN to save one of Nigeria’s Systemically Important Banks is yielding fruit. Polaris Bank seems to be on a smooth drive to a great rewarding future for depositors and employees barring any unforeseen odds on its way. But for now, it would seem the future looks good for Polaris Bank.