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Polaris Bank Reportedly Loses N26Bn Loans to 6 Ex-Directors without Collaterals

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Polaris Bank has lost N26.005 billion worth of loans granted to 6 ex-directors, mostly without collaterals.

Polaris Bank Reportedly Loses N26Bn Loans to 6 Ex-Directors without Collaterals

Economy Post found from the bank’s 2022 annual report that 5 out of the six ex-directors did not perfect their collaterals before receiving the loans from the bank.

Only one ex-director, Jason Fadeyi of Newcross Exploration and Production, who collected N25.442 billion term loan from the bank, perfected his collaterals.

However, the term loan given to him was recorded as “lost,” meaning that it was not recovered by the bank.

From the Corporate Affairs Commission (CAC) records, Newcross Exploration and Production was registered on July 9, 2013, with Festus Fadeyi and Bolaji Ogundare as persons with significant control of the company.

Fadeyi borrowed another N30.922 billion term loan from the bank – which has been placed on the watchlist.

Placing a loan on a watch list means that “a list (a subset) from a universe of securities, loans or other financial instruments is identified for more intense monitoring,” according to the Open Risk Manual.

Based on Polaris Bank’s records, Ibiyi Ekong of Demanta Nigeria Limited is another ex-director who took loans from the bank without repaying them.

Ekong, a former executive director of the bank who resigned in 2016, owes the bank N89 million.

The bank recorded it as loss, with her collaterals not perfected.

Collateral perfection allows a legal claim to seize assets of a payor defaults, according to Investopedia, an online investment dictionary.

She now works at the Foundation for Partnership Initiatives in the Niger Delta.

Ekong also owes the bank N4 million borrowed as a mortgage loan and another N4 million taken as an auto loan, which was not repaid.

Bank records showed their collateral perfection statuses were described as “not applicable.”

Next is Timothy A. Oguntayo, who took N100 million mortgage loan but did not pay it back, prompting the bank to report it as loss.

The bank said that his collateral perfection status was “not applicable.” When someone’s collateral perfection status reads “not applicable,” it means the person is not mandated to present collateral for a loan, experts said.

Oguntayo is a former managing director of Skye Bank (now Polaris Bank), who was earlier charged by the Economic and Financial Crimes Commission (EFCC) but later exonerated.

Oguntayo also owes Polaris Bank a mortgage loan of N100 million, which was also recorded as “lost.” It means he did not pay back both loans.

Abimbola Izu, another ex-director, got N103 million mortgage loan from Polaris Bank but did not repay it, according to bank records.

Her collateral perfection status was also recorded as “not applicable.”

Bank records also showed that Izu took a term loan of N17 million with another “not applicable” collateral status.

Izu is a lawyer and principal advisor at Portalls Advisory Services.

Theodora Amaka Onwughalu is another ex-director who borrowed N19 million mortgage loan from Polaris Bank but did not pay it back. Her loan was recorded as “lost,” with collateral perfection status classified as “not applicable.”

Onwughalu is the chief executive officer of Blueshield Financial Services Limited and was the former group managing director of Mainstreet Bank Limited.

Similarly, Dotun Adeniyi, an ex-director of Polaris Bank, borrowed N27 million mortgage loan from the financial institution but did not repay it.

The loan was recorded as “lost.” The collateral perfection status was also described as “not applicable.” Adeniyi resigned from the former Skye Bank ( now Polaris Bank) board in 2016 during a shakeup, which saw all the board members resign their positions at the bank. According to bank records, the ex-directors took these loans while they were members of the board of the bank.

Tokunbo Abiru, now a Lagos senator, was appointed the managing director of the then Skye Bank in 2016 but resigned in 2020 to fulfil his political ambition. Adekunle Sonola is the current managing director of the bank.

As of December 31, 2022, total outstanding loans owed by these ex-directors of Polaris Bank, some of which would not be repaid, amounted to N 57.473 billion.

Management contributed to collapse of Skye Bank

In 2018, the Central Bank of Nigeria (CBN) revoked Skye Bank’s license and set up a bridge bank known as Polaris Bank. Skye Bank’s problems began when it used short-term funds to buy another bank, Mainstream Bank, in 2014, according to Reuters.

The Nigeria Deposit Insurance Corporation (NDIC) had accused the former management of the bank of being major contributors to the bank’s collapse, Reuters reported.

The CBN took over the bank in 2018 and injected N1.3 trillion to recapitalise and rehabilitate it.

As of 2018, the defunct Skye Bank Plc operated 300 branches across the country, employing over 500 staff members.

The bank was accused of poor corporate governance and inept management, which are evident in the loans taken without collateral and repayment.

Strategic Capital Investment Limited emerged as the preferred bidder for Polaris Bank in 2022, paying N50 billion.

It was given 25 years to repay the N1.3 trillion injected by the apex bank into the bank.

Experts call for strong corporate governance

Financial experts have urged other financial institutions to learn lessons from the defunct Skye Bank and strengthen their corporate governance structures.

“Some banks still have issues with corporate governance. It is obvious, from what you have said, that there was a total collapse of corporate governance at the defunct Skye Bank,” said an Abuja-based financial analyst, Uko Amadi.

“I guess the CBN was a bit late and did not act fast. However, banks should begin to examine themselves to ensure that things are done transparently. They are custodians of people’s money but should not act as if the deposits are theirs,” he noted.

An ex-bank worker, Chinyere Ogundamisi, said there was a need for regulators to pay a closer attention to activities of financial institutions.

“I am not for over-regulation because I think there is already over-regulation of the banking system. But I am saying that if you are regulating, get experienced people who know where loopholes should be to do the monitoring. Some persons at the CBN never worked in banks, and cannot detect some sharp practices. So, get people who worked in banks and allow them to do the monitoring.”

Bank keeps mute

Bolarinwa Rasheed, head of Corporate Communications, Polaris Bank, did not respond to questions regarding why the loans were lost even though the people were still alive.

He promised to get back to us but did not do so as at the time of going to press.

Credit: Economy Post


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E-Financial

World Bank Predicts Rise of Poverty in Nigeria Despite Economic Growth

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The World Bank has predicted that Nigeria may likely see a rise in the levels of poverty over the next two years despite a moderate economic growth forecast.

The multilateral lender noted that while non-resource-rich countries are expected to continue reducing poverty and grow faster, resource-rich countries like Nigeria may drag due to declining oil prices.

”Resource-rich countries are expected to see less progress in terms of poverty reduction,” the World Bank said in its Africa Pulse report titled ‘Improving Governance and Delivering for People in Africa’.

“Importantly, poverty in resource-rich, fragile countries (which include large countries like the Democratic Republic of Congo and Nigeria) is expected to increase by 3.6 percentage points over 2022–27,” it added.

The Nigerian government has in the past two years provided various safety nets to ease the burden of the citizens, but these, on their own, may not be enough to lift millions off the poverty line.

The reforms which were implemented some 20 months ago, though came with a plethora of gains such as allowing the economy to be market-driven rather than artificial pegging, it’s nonetheless exacerbated poverty with the numbers rising from 104 million to 129 million people in a year.

According to the World Bank, Nigeria accounts for 19 percent of the share of poverty in Sub-Saharan Africa, followed by Congo, Ethiopia and Sudan with 14 percent, 9 percent and 6 percent respectively.

But despite the growing poverty, the Washington-based lender expects Africa’s most populous nation annual GDP to increase 3.6 percent in 2025 and 3.8 percent in two years. “Economic growth is expected to remain moderate in Nigeria,” the World Bank said.

“It is expected to increase from 3.4 percent in 2024 to 3.6 percent in 2025, and slightly increase to 3.8 percent in 2026–2027.”

According to the World Bank, the gradual recovery of the Nigerian economy along the forecast horizon is driven primarily by the service sector—specifically, finance, information and communications technology services, and transportation—and, to a lesser extent, a rebound in oil production that converges to its OPEC+ quota.

The World Bank’s projection is relatively higher than the International Monetary Fund (IMF) revised forecast for the nation.

IMF cuts Nigeria’s 2025 economic growth forecast downward to 3.0 percent from the earlier projection of 3.4 percent in 2024, citing weakening oil supply and escalating global trade tensions.

The two projections are however largely lower than Nigeria’s ambitious projected annual GDP growth of 4.6 percent outlined in the 2025 budget.

According to Adetilewa Adebajo, investment banker and economist Nigeria must intensify efforts towards economic diversification, infrastructure development, and asset optimisation to stimulate economic growth and attract global investments

“Sale of oil and gas JV assets to optimise equity within the FGN capital structure and balance sheet are crucial for Nigeria’s path towards sustainable development.

“Deliberate Investment projects such as the Agro Airport development and Olokola deep sea port, in Ogun State, major infrastructure projects led by companies like Arise and Dangote, need to be replicated nationwide,” Adebajo said.


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E-Financial

Report Suspected Illegal Investment Schemes to SEC

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Securities and Exchange Commission (SEC) has urged Nigerians to report any suspected illegal investment schemes to the commission for proper investigation and necessary action.

Report Suspected Illegal Investment Schemes to SEC

This is in the light of the recent collapse of Crypto Bridge Exchange (CBEX).

The Commission issued a notice on Thursday to the investing public, warning that Ponzi investment schemes pose a significant danger to the growth of the capital market.

In its latest advisory, the Commission highlighted the growing threats and risks posed by Ponzi schemes, illegal investment operations, and unregistered digital asset platforms.

It explained that fraudulent entities and individuals continue to exploit unsuspecting investors with deceptive promises of high returns, often leveraging the allure of digital assets to create a false sense of legitimacy.

“The public is strongly advised to be wary of investment opportunities that promise guaranteed or unusually high returns with little or no risk.

“These include unregistered platforms offering cryptocurrency investments, forex trading, or blockchain-based schemes, without undergoing the prescribed processes to obtain prior approval from the SEC.

“The SEC reiterates in this regard that, ‘If it sounds too good to be true, it likely is.’”

The Commission urged potential investors to conduct thorough due diligence before investing and to verify the registration status of the company or individual offering the investment through the SEC’s website.

The Commission explained that Section 196(3) of the Investments and Securities Act, 2025, criminalizes the promotion and operation of prohibited or unregistered schemes.

“This violation is punishable, upon conviction, by a fine of not less than ₦20 million or a prison term of 10 years, or both,” the Commission warned.

The SEC stated that it is fully committed to identifying and prosecuting offenders to the full extent of the law.

“We encourage the public to partner with the SEC to safeguard the integrity of the investment environment in Nigeria by promptly reporting suspected illegal investment schemes to the SEC,” the notice concluded.


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E-Financial

Fintechs Add $18m to New Tax Initiative

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The Nigerian federal government announced that the Electronic Money Transfer Levy (EMTL) generated $49.5 million in revenue, with fintech companies contributing $18 million.

This fund, as reported by the Federation Account Allocation Committee, is a considerable 56.80 percent increase over the $31.6 million earned during the same period in 2024.

Previously, the charge mainly affected established banking institutions. However, fintech firms have been included because they have contributed a phenomenal 2,507.94 percent growth in transaction values since 2020.

The EMTL is part of the government’s attempt to regulate the booming fintech sector, which completed transactions worth $29 billion in 2023 and $49.3 billion in 2024.

The EMTL was created by the Finance Act 2020 as an amendment to the Stamp Duty Act. It charges $0.03 (N50) for electronic transactions of $6.19 (N10,000) or more made through banks and financial institutions.

This tax seeks to capitalise on the increasing expansion of electronic payments, which will exceed $619.70 billion in total transactions by 2024.

In response to the burgeoning fintech sector, the government has increased its tax base, with annual EMTL collections expected to increase by 31.35 percent.

According to the Medium Term Fiscal Framework for 2025-2027, the federal government expects EMTL revenue to reach $142 million in 2025, up from $108 million in 2024.

However, industry experts have expressed concern about the potential impact of additional taxes on users.

 


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