Bank

Fidelity Bank reaches agreement to acquire Union Bank UK

Loyalty bank has agreed to take over the UK unit of Nigeria’s second-oldest lender, Union Bank, the former announced on Tuesday.

This is the latest phase of the latter’s divestment train which, from the end of last year, saw Union Bank sell 90% of its stake to new owner, Titan Trust.

Fidelity Bank will acquire Union Bank UK 100% if the deal goes through, according to a binding agreement between the two said in a regulatory filing released by the Nigerian Stock Exchange and seen by PREMIUM TIMES.

The industry watchdog, the Central Bank of Nigeria, sanctioned the deal with “No objection”.

The deal allows SME-focused Fidelity Bank, which owns a international banking license but never operated outside of its base in Nigeria, entering the UK market where in 1983 Union Bank first set foot to provide personal banking, cash management and structured trading and commodity finance.

“Union Bank UK’s diverse service bouquet and business model have offered compelling synergy, and we hope to leverage existing capacity to create a scalable and more sustainable service franchise that will support the wider ecosystem of our business. trade and banking services in the diaspora,” said Fidelity Bank chief Nneka Onyeali-Ikpe.

The Union Bank of Nigeria itself originated in 1917 in Lagos with Britain’s Barclays Bank as its forerunner.

The announcement spurred buoyant trading in the acquiring company’s shares, leading to Fidelity Bank emerging as the second most active stock on Custom Street in Lagos as the closing bell rang on Tuesday, with 10.2 million units traded in 147 transactions. The stock market is made up of 156 stocks.

No mention was made of the value of the deal, but the estimate will likely go the enterprise value route, which may require Fidelity Bank, as transactions like this typically require, to draw funds from its cash reserves to acquire the shares of the target. bank shareholders with a premium or debt could be sought for this purpose.

The bank runs 250 branches in Africa’s largest economy, the fruit of 34 years of activity in the country, dating back to 1988.

The transaction puts the lender on track to achieve Tier 1 status by 2025, by which time it hopes to have joined this elite league of Nigeria’s five largest banks by assets sometimes referred to as FUGAZ after their initials.

Guaranty Trust Holding Company, the smallest of the five, had assets worth N5.5 trillion at the end of March, compared to Fidelity Bank’s N3.6 trillion.

“Although these are just the first few days, we are pleased to report that we are on track to achieve our Tier 1 ambition, as evidenced by our financial results which indicated significant growth across key reporting lines. quarter to quarter,” Onyeali Ikpe said of the goal she set for herself last year, shortly after taking office, a vow to deliver the honor of the bank being named among the biggest in the industry in four years.

It’s a pointer that further acquisitions or mergers could follow to allow it to expand its asset base to measure up to the prerequisites for Tier 1 status.

Challenger Titan Trust bank caused the biggest upheaval in Nigeria’s M&A scene last year when it announced the agreement to take over the century-old Union Bank, an acquisition that was finalized in June.


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