Some minority shareholders of Union Bank Plc have expressed worry over the planned acquisition of Union Bank of Nigeria UK Plc, by Fidelity Bank Plc.
Fidelity Bank, earlier today, notified the general public that it has entered into a binding agreement for the acquisition of 100% equity stake in Union Bank UK Plc for which the Central Bank of Nigeria has issued a letter of no objection.
Union Bank UK commenced operations from the heart of the city of London in 1983 to provide competitive banking services including personal Banking Trade Finance, Treasury Management, and Structured Trade and Commodity Finance which it offers to individual and corporate clients.
What they are saying
Reacting to this development, the Chairman, Issuers and Investors Alternative Dispute Resolution (IIADRI), Mr Moses Igbrude, said: “Acquisition or buying of shares of companies is the major objective of having a capital market. There must be a willing seller and a willing buyer with the resources to do the transaction involved.
“So Fidelity Bank acquiring Union Bank UK is not surprising to me because the core investor there have since indicated their interest to divest from the bank and recently, the shareholders approved the sale at the Extra Ordinary General Meeting (EGM).
“My concern is that the bank should utilise the proceeds well to run and manage the bank for the benefit of all stakeholders.
“Since Titan Trust Bank Limited is now the new investor, they are the ones that will decide whether to use it for bad or good because they have the controlling power.”
Boniface Okezie, the national coordinator of the Progressive Shareholders Association said the move is in order and a welcome development.
“We gave a nod to the bank at the EGM to sell and distribute the money among the shareholders. If Nigerian Bank is buying it, I like it. It is a good one for Fidelity Bank which don’t have any offshore branch. Fidelity is a growing bank and needs it to consolidate in terms of sourcing for forex.
“Union Bank is selling to consolidate in the market and regain tier-one position in the local market. It has not been easy for them because a lot of distortion was carried out during the CBN intervention. The UK bank has not been growing revenue, they have been recording losses over the years. That is one major reason they want to dispose of it. You let it go when it wants to drive you down,” Okezie said.
A shareholder and the former President of Noble Shareholders Association, Chief Timothy Adesiyan, said: “None of all these old generation banks is worthy of writing home about. They have wasted our money and we are not growing younger with our investment in some of these banks.
“My concern is that any investor that thinks about them and how our money was wasted will not have rest of mind. The new generation banks are doing far better than them.
“Union Bank in Nigeria was offered for sale by the people who originally bought it when they discover it was not working. I am in support of the sale. When you buy something and it is not making profit, you need to sell it. I think they are planning IPO for recapitalisation. My belief is that Titan Trust will be able to operate the bank very well in Nigeria.”
What you should know
- A cursory look at the 2021 annual report of Union Bank showed that the Group is currently awaiting the UK regulatory approval to conclude the sale of its UK subsidiary, Union Bank UK, which has been designated as discontinued operations.
- As at December 2021, the UK bank reported revenue of N2.019 billion as against N2.656 billion in 2020, a decline of 24%. While loss after tax stood at N7.146 billion from N6.457 billion in 2020, an increase of 10.67%. The net assets stood at N18.911 billion in both years.
In case you missed it
- Notifying the general public, Fidelity Bank Plc stated that it has entered into a binding agreement for the acquisition of 100% equity stake in Union Bank UK Plc for which the central bank has issued a letter of no objection.
- It noted, “Union Bank UK commences operations from the heart of the city of London in 1983 to provide competitive banking services including personal banking, trades finance, treasury management and structured trade and community finance which offers to individual and corporate clients.”
- Commenting on the agreement, Mrs Nneka Onyeali-Ikpe, the Managing Director/Chief Executive Officer, Fidelity Bank said, “This transaction aligns with our strategic plan of expanding our services touchpoints beyond the Nigerian market and providing straight-through services that meet and exceed the needs of our growing clients. The diverse bouquet and business model of union Bank UK offer a compelling synergy and we hope to build on the existing capacity to create a scalable and more sustaining service franchise that will support the wider ecosystem of our trade businesses and diaspora banking services.
