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Update: Reports suggest Zenith Bank considering merger with Union Bank

Zenith Bank Plc has reportedly been given the green light to merge or acquire Union Bank Nigeria Plc.

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Emeka Emuwa ceo of union bank, DEAL: Reports suggest Zenith Bank given green light to acquire Union Bank

Zenith Bank Plc has reportedly been given the green light to merge or acquire Union Bank Nigeria Plc. Nairametrics got wind of this from a reliable source. We understand talks are currently ongoing between the banks and a tentative arrangement may have been reached to commence due diligence.

Just last week reports from the Daily Independent suggest Nigeria’s oldest bank FirstBank was also on track to merge or acquire Polaris and Heritage Banks respectively. The bank issued a press release on the Nigerian stock exchange that did not deny the claims but also did not confirm if it is true.

Zenith Bank is Nigeria’s largest bank by profits and second by total assets and could increase its size significantly further with a potential acquisition or merger of this magnitude.

Sources from both banks denied any merger plans have been concluded but will not deny or affirm if talks are ongoing. Our sources also inform Nairametrics that some executives of both banks are not favourably disposed to a merger while others are. Any merger between the banks will surely require the blessing of Jim Ovia, the Chairman and Founder of Zenith Bank, and we now also understand no decision has been made. One of our other sources also claims that he denied any such deal. 

We did not expect an affirmation of a deal at this stage. Nairametrics also got a similar response when we contacted sources in First Bank for the reported merger with Polaris Bank and Heritage Bank. In 2018 Access Bank and Diamond Bank also denied any merger plans when we reached out to them when the initial merger news broke. Both banks eventually announced a deal and consummated a merger in December 2018.  Deals like these are typically not confirmed until a clearance is obtained from the Securities and Exchange Commission.

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Why the merger: It is not immediately clear why both banks will be considering a merger, however, Union Bank owners Atlas Mara with a 49% stake has been under pressure to exit their African holdings. Last year (February), Atlas Mara co-founder Bob Diamond announced he was resigning his post as Chairman of the company. The company said it was looking at selling off banking assets in countries where it was not the dominant player.

READ MORE: CBN says Nigerian banks’ assets and liabilities are now at N41.42 trillion

Earlier in January, Union Bank sold its United Kingdom subsidiary to MBU Capital Limited. The London-based management investment firm acquired Union Bank UK after emerging as the most preferred bidder. According to the bank, “This sale is aligned with Union Bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria.”

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Union Bank also recently raised N20 billion in series 3&4 commercial paper after successfully raising N24.3 billion through the issuance of the Series 1 and 2 of its N100 billion commercial paper programme.

Why Zenith: We believe for Zenith Bank a potential merger could be for two main reasons. Firstly, a merger firmly solidifies Zenith Bank’s position as the largest bank by total assets after falling second to Access Bank with N7.1 trillion. It also gives Zenith Bank control over several juicy assets and right of ways owned by Union Bank from its legacy years.

READ ALSO: Women entrepreneurs set to benefit $200 million from Union Bank 

It could also have been instigated by the CBN which cannot phantom another nationalization of a bank the size of Union Bank. Sources inform Nairametrics that the apex bank is favourably disposed to this move.

Result sheet: Union Bank Results; In a notification that was sent to the Nigerian Stock Exchange (NSE), the banking group recorded a 10.3% growth in profit. The profit before tax as of December 31, 2019, was N20.35 billion as against the N18.45 billion that was achieved for the corresponding period for 2018.

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Zenith Bank, on the other hand, reported a record profit after tax N208 billion out of a gross earning of N662 billion. Zenith Bank’s net assets of N941.8 billion dwarfs Union Bank’s net assets of N252 billion as of 2019.

Stanbic IBTC

Union Bank share price closed at N6 with a market cap of N174 billion as on Friday, March 13th. Zenith Bank closed at N11.90 or N373 billion and trading at a price to earnings multiple of 1.79 compared to Union Bank’s 7.28x.


Note: This story was updated with new information in paragraph 4 and 5.

 

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. Featured Financial Market Analysis for a Fortune Global 500 Company. Member of the Chartered Financial Analyst Society. Follow Olumide on Twitter @tokunboadesina or email [email protected]

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Economy & Politics

Nigeria to exit recession by first quarter of 2021

The Minister of Finance has said that Nigeria will exit the economic recession by the first quarter of 2021.

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Finance, Ministaer, vow to recover AMCON debt through issuance of promissory notes, FG reiterates stance on IPPIS as ASUU threatens strike, Finance Minister, Zainab Ahmed identifies capital market as key driver for economic growth , Nigeria has paid $1.09 billion to service its debts in 2019  , Dividends on oil proceeds will be taxed - FG , State governments own most bad roads - Finance Minister says, Budget deficit increases by N351.98 billion, as FG misses revenue target, Economy: Funding MSMEs in Nigeria , Finance Bill: New tax regime to take effect from Jan 2 - FG , Again, Finance Minister argues that Nigeria is not in debt distress , ECOWAS: Single currency regime not kicking off in 2020  , FG: CBN holds N43 billion stamp duty charges collected by banks , FG may shift deadline to deactivate bank accounts without tax verification, Confusion as ministry and presidency disagree over Finance Act start date, 7.5% VAT: Implementation to begin Feb 1 – FG , Finance Minister: Nigeria to go into recession if ..., Foreign tech companies that will now pay tax to FGN: see the criteria

The Minister for Finance, Budget and National Planning, Mrs. Zainab Ahmed, on Monday, November 23, 2020, said the country will exit recession by the first quarter of 2021 as the Nigerian government is working towards reversing the declining economic trend in the country.

According to Channels Television, this disclosure was made by Mrs. Zainab Ahmed while speaking on the latest GDP figures released by the National Bureau of Statistics (NBS) about the current recession in the country at the ongoing 26th Nigerian Economic Summit, organized by the Nigerian Economic Summit Group (NESG) and the Federal Ministry of Finance, Budget, and National Planning.

The Finance Minister said the COVID-19-induced recession followed the pattern across the world, where many countries had entered an economic recession.

Ahmed said, “Nigeria is not alone in this, but I will say that Nigeria has outperformed all of these economies in terms of the record of a negative growth.”

The country’s economy posted a second consecutive negative growth, contracting by 3.62% in the third quarter. This negative growth is much better than the 6.01% that was earlier forecasted by the NBS.

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Also at the Economic Summit, Vice President Yemi Osinbajo, emphasized that the government is committed to working in synergy with the private sector to foster equitable growth and underpin national development.

The 26th Nigerian Economic Summit focuses on building resilient partnerships for Nigeria’s households, businesses, and the general economy.

What you should know

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It can be recalled that on Saturday, NBS announced that the country had entered its second recession in 5 years in the third quarter of this year, as the Gross Domestic Product (GDP) fell for the second consecutive quarter.

According to figures released by the Nigeria Bureau of Statistics (NBS), cumulative Gross Domestic Product (GDP) for the first nine months of 2020, therefore, stood at -2.48%, just as it recorded a -6.10% in the second quarter.

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Sports

CAF President banned for 5 years for breaching FIFA Code of Ethics

CAF President has been sanctioned with a 5 years ban after being found guilty of breaching FIFA Code of Ethics.

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Mr. Ahmad Ahmad, the President of Confederation of African Football (CAF), African’s football governing body, has been sanctioned with a 5 years ban from all “football-related activities (administrative, sports or any other) at both national and international level” after being found guilty of breaching FIFA Code of Ethics by the adjudicatory chamber of the independent Ethics Committee.

The 60-year-old Malagasy assumed office as the President of the Confederation of African Football (CAF) on 16th March, 2017.

His position also makes him a FIFA Vice President. Since his assumption of office, his four-year term has been clouded with allegations of financial wrongdoing and misconduct.

Mr. Ahmad was found guilty by the adjudicatory chamber of the independent Ethics Committee of having breached art. 15 (Duty of loyalty), art. 20 (Offering and accepting gifts or other benefits), and art. 25 (Abuse of position) of the 2020 edition of the FIFA Code of Ethics, as well as art. 28 (Misappropriation of funds) of the 2018 edition. In addition, a fine in the amount of CHF 200,000 (#83,754,093.14) was imposed on him.

However, Ahmad can appeal his sanction at the Court of Arbitration for Sport (CAS) once he has received the full grounds for the decision, a process that can take up to 60 days.

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Fifa released the following statement on the matter today:

The adjudicatory chamber of the independent Ethics Committee has found Ahmad Ahmad, the President of the Confederation of African Football (CAF) and a FIFA Vice-President, guilty of having breached art. 15 (Duty of loyalty), art. 20 (Offering and accepting gifts or other benefits) and art. 25 (Abuse of position) of the 2020 edition of the FIFA Code of Ethics, as well as art. 28 (Misappropriation of funds) of the 2018 edition.”

“The investigation into Mr. Ahmad’s conduct in his position as CAF President during the period from 2017 to 2019 concerned various CAF related governance issues, including the organization and financing of an Umrah pilgrimage to Mecca, his involvement in CAF’s dealings with the sports equipment company Tactical Steel and other activities.”

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“In its decision, following an extensive hearing, the adjudicatory chamber ruled that, based on information gathered by the investigatory chamber, Mr. Ahmad had breached his duty of loyalty, offered gifts and other benefits, mismanaged funds and abused his position as the CAF President, pursuant to the FIFA Code of Ethics.”

“Consequently, the adjudicatory chamber found that Mr. Ahmad had breached arts 15, 20 and 25 of the current edition of the FIFA Code of Ethics, as well as art. 28 of the 2018 edition, and sanctioned him with a ban from all football-related activity (administrative, sports or any other) at both national and international level for five years. In addition, a fine in the amount of CHF 200,000 has been imposed on Mr. Ahmad.”

“The terms of the decision were notified to Mr. Ahmad today, the date on which the ban comes into force. In accordance with art. 78 par. 2 of the FIFA Code of Ethics, the full, motivated decision will be notified to Mr. Ahmad in the next 60 days, after which it will be published on legal.fifa.com.”

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Business News

United Securities Limited changes name to Coronation Registrars Limited

United Securities Limited formally notifies its numerous customers and stakeholders of a change of name to Coronation Registrars Limited.

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In line with section 30(3) of the Companies and Allied Matters Act 2020 (CAMA), United Securities Limited has formally notified its numerous customers and stakeholders that it has obtained regulatory approval from the Corporate Affairs Commission to change its name to Coronation Registrars Limited.

The disclosure is contained in a verified post on Linkedln, signed by the firm’s Secretary, Omotoyosi Kola-Ojo, and seen by Nairametrics.

What this means

In line with the recent corporate action and according to section 30(5) of the Companies and Allied Matters Act, the company has been issued a new Certificate of Incorporation by the Registrar General of the commission, evidencing the change of name.

What they are saying

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A verified post by the Firm read thus: “The Public is hereby informed that United Securities Limited having passed the necessary Special Resolutions in line with Section 30(3) of Companies and Allied Matters Act 2020 (CAMA) and obtained the necessary regulatory approval of the Corporate Affairs Commission, has changed its name to CORONATION REGISTRARS LIMITED.

The public is further informed that pursuant to Section 30(5) of the Companies and Allied Matters Act, the company has been issued a new certificate of incorporation by the Registrar General of the Commission evidencing the change of name. All stakeholders are requested to take note of the above information.”

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