Union bank

Inside Titan Trust Bank’s planned acquisition of Union Bank

In December last year, news of the deal spilled over into the financial sector. TTB, a bank established in 2019 and largely unknown domestically, has acquired a majority stake in Union Bank, which is Nigeria’s second oldest bank.

TTB is positioning itself as a digital bank and hopes to leverage Union Bank’s reach – 239 branches and around 1,000 outlets – to evolve its “innovation-driven banking model”.

Although the executives of the two banks said the process was still ongoing and subject to some key regulatory approvals, the deal would make TTB the largest shareholder of any listed Nigerian bank in terms of percentage ownership.

Focus on history

The Union Bank of Nigeria was established as a colonial bank in 1917 and nationalized in the 1970s. The government sold its 51.67% majority stake to private and commercial Nigerian investors in 1993.

Union Global Partners Limited (UGPL), a group of local and international investors, including Africa Capital Alliance, African Development Corporation, Corsair Capital, FMO – the Dutch government’s development finance institution – Chandler Corporation and Standard Chartered Private Equity invested $500 million during the l recapitalization exercise of the bank in 2012.

The investment gave UGPL a 65% stake in the bank in an exercise overseen by the Central Bank of Nigeria through the Asset Management Company of Nigeria (AMCON). Towards the end of 2014, AMCON sold its remaining 20% ​​stake in the bank to Atlas Mara, a financial services holding company.

TTB’s planned acquisition of an 89.39% stake in Union Bank is possible thanks to the divestment plans of major shareholders, UGPL and Atlas Mara. Local media reported that “the deal will see existing major investors in Union Bank, UGPL (64.98%), Atlas Mara (25.53%) and other shareholders divest their major stakes totaling 89.39% in Union Bank to TTB”.

The fine print

In a statement, TTB Chairman Tunde Lemo, who is also Chairman of Flutterwave and former Central Bank Deputy Governor, said: “The agreement represents a unique opportunity to combine the long-standing and premier banking franchise. Union Bank’s plan with TTB’s innovation-driven model, which promises to enhance the product and service offering for our valued combined customers.”

Union Bank executives, through Chairman Beatrice Bassey and CEO Emeka Okonkwo, also expressed similar sentiments.

However, a senior bank official who requested anonymity said The Africa report: “At this time, the bank is unwilling to comment or speak about its merger with Union. [Bank] because some things are not finalized.

Some ongoing legal cases against the acquisition are also a source of concern among investors. In June last year, Petro Union Oil and Gas Company filed a suit in the Federal High Court in Lagos to enforce a 2014 judgment, which called on the central bank and Union Bank to pay some 15 billions of dollars to the company. Appeals are also pending in this case.

The money is used to repay $3 billion that the company claims defendants illegally took from it in 1995 and interest accrued since then.

Long legal proceedings

The basis of Petro Union Oil and Gas Company’s original case in March 2012 in a Federal High Court is that Union Bank and CBN failed to honor a check it purchased from a branch of Barclays Bank in the UK. He sought to cash the check in order to “build three petrochemical refinery complexes and a bank in Nigeria”.

Union Bank and the CBN claimed they could not assign a value to the check, not only because their investigation revealed that the company which issued the check did not exist at the time on the UK Companies Registry Uni and that the check was issued five years after the account. was issued on had been closed.

Petro Union won the lawsuit in 2014, but Union Bank and the CBN filed separate appeals. The company again won Union Bank’s appeal in 2018 and the bank later took the case to the Supreme Court, where the case is still pending. CBN’s appeal to the Court of Appeal has yet to be determined.

In the new case filed in June 2021, the company asked the Federal High Court to restrain the bank from selling its assets until pending court cases are determined.

Impact of the case

A seasoned lawyer familiar with the case but who prefers to remain anonymous says The Africa Report that although the litigant could appeal against the last judgment, he doubts that this will ever happen because the judgment had clearly indicated that their case was a “misrepresentation and not the state of the facts” because it is the shareholders who settle their shares, not Union Bank selling its assets. However, he feels the transaction is isolated even if they appeal.

When asked what the impact would be if other existing cases went against Union Bank, the attorney said, “The ongoing appeals have nothing to do with the transaction between the shareholders of Union Bank and TTB. Union Bank is not a party to the transaction and its assets are not affected by the transaction. I don’t foresee Petro Union winning, but even if they do against the odds, it won’t affect the validity of this trade. At that point, the discussion can only focus on the impact of judgments on the overall value of the bank’s assets.

Although the banks have maintained their innocence and appealed, their lawyers told the court in this new case – which asks the judge to ensure the status quo and essentially stop the acquisition of Union Bank shares by another party until his case is finally settled – that, among other things, the litigant does not have the power “to prevent a shareholder of a company with which he is in dispute from selling his shares”.

The June 2021 deal was dismissed, giving Union Bank an opportunity to pursue its acquisition.

Small eats big

It is not the first time that a small bank has acquired a bigger one in Nigeria. However, this is the first time that an unlisted bank, which is barely two years old, has bought out a century-old listed bank.

United Bank of Africa (UBA) was born out of a 2005 merger with Tony Elumelu’s Standard Trust Bank, which acquired Crystal Bank in 1997 and listed on the Nigerian Stock Exchange (NSE) in 2003. UBA, on the other hand , which had been in existence since 1949, was incorporated as a limited liability company in 1961 and listed on the NSE in 1970.

TTB supporters

This then raises some questions, such as what is the financial capacity of the new bank and who are its backers?

An investigation by the local finance publication, Nairametryrevealed TTB’s backers and how TTB compares to Union Bank.

Source: Nairametrics – Facts and Figures: How Titan Bank Compares to Union Bank

TTB Chairman Tunde Lemo, while clarifying that he does not control the majority shareholding of the bank, said the bank has a broad shareholding structure. He told local media: “I […] need to provide more details on the ownership structure of Titan. The bank is 85% owned by Vink Corporation, a foreign company.

He continued: “Local shareholders own the balance, and the shareholding is dispersed. My shareholding is therefore very small and insignificant. I just lead.

A breakdown of TTB’s shareholding structure shows that Luxis International DMCC – with 28,090,400 shares – holds 48.09% of TTB. Magna International DMCC – with 21,840,000 shares – owns 37.39%. And Aminu Yao – with 5,299,700 – shares owns 9.07%.

These companies are said to be linked to Vink Corporation, which is a subsidiary of the Tropical General Investment Group (TGI Group). The owner, Cornelius G. Vink, is said to have operated in Nigeria since the 1980s.

The TGI Group’s website states that its business interests straddle “fast-moving consumer goods, agricultural inputs, industrial chemicals, household cleaning products and pharmaceuticals.”

Who’s who at TTB

Besides its chairman, other directors and some members of the management team have had banking careers spanning more than two decades:

  • CEO Mudassir Amray is the former Managing Director/Group Head of Global Corporate and Investment Banking and Senior Credit Officer for Citibank in Nigeria and Ghana;
  • Andy Ojei, non-executive director of the bank, is a former executive director of Zenith Bank;
  • Adaeze Udensi, Executive Director, served as Chief Compliance Officer at Heritage Bank;
  • And the bank’s chief financial officer, Mark Oguh, was the financial controller of Diamond Bank, which was acquired by Access Bank in 2019.

The institution relies on local executives who know the sophisticated and constantly evolving financial sector to help it achieve its ambitions.