December 24, 2021/CSL Research
The Board of Union Bank of Nigeria Plc (NR) on Thursday, 23 December notified the Nigerian Exchange Limited (NGX) and Securities Exchange Commission (SEC) that its investors, Union Global Partners Limited, Atlas Mara Limited, and other shareholders have reached an agreement with Titan Trust Bank Limited (TTB) to divest their shareholding in Union Bank to TTB. The agreement, which is subject to regulatory approvals and other financial conditions, will upon completion transfer 89.39% of Union Bank’s issued share capital to TTB.
Titan Trust Bank Limited was established on 12 December 2018 and obtained its National Banking license in April 2019 to operate as a commercial bank with national authorization. The bank has a network of 114 branches & SME centers. The Chairman of the bank, Tunde Lemo, was a former deputy governor of operations and director of the Central Bank of Nigeria.
Established in 1917, Union Bank has been through ups and downs. In 2005, to meet the CBN’s N25bn minimum capital base following the consolidation exercise, Union Bank of Nigeria Plc acquired Universal Trust Bank Plc and Broad Bank Ltd. It also absorbed Union Merchant Bank Plc, which was formerly a subsidiary of the bank and raised funds via a public offering/rights issue. On 14 August 2009, following an extensive audit after the banking crisis, CBN intervened in the bank through an initial US$800m cash injection in the form of a 7-year, 6% note to stabilize the bank and appointed a new executive management team to take over the management of the bank.
On 12 July 2011, Union Bank signed a Transaction Implementation Agreement (TIA) with African Capital Alliance Consortium (ACA Consortium), showing that the ACA consortium would invest US$750m in the bank made up of US$500m equity and US$250m tier-II capital.
African Capital Alliance (ACA) led a consortium of international investment groups and development finance institutions to invest in Union Bank. The ACA Consortium invested as Union Global Partners Limited (UGPL). Later in the year, the core investors in Union Bank, Union Global Partners, increased their stake in Union Bank by acquiring part of shares owned by AMCON. In the last quarter of 2014, AMCON’s remaining 20% stake in the bank was acquired by Atlas Mara. UPGL companies consist of African Capital Alliance, Standard Chartered Private Equity, African Development Corporation, Corsair Capital, FMO Netherlands and Richard Chandler Corporation.
As of 9M 2021, Union bank had total assets of N2.6trn, customer deposits of N1.3trn, Net loans of N809.1bn, capital adequacy ratio at 15.8%, and NPL ratio at 4.7%. This compares with Titan with only N136bn in total assets as of FY 2020, customer deposits of N85.97bn and Net Loans of N38.7bn. There have been several attempts to reposition Union bank, and we believe the acquisition will be beneficial to both parties. This helps Titan Trust Bank to rapidly grow its market share, take advantage of the benefits associated with a reverse takeover transaction should the newly emerged company go public, and compete with Tier 1 banks.
