Fidelity Bank to acquire Union Bank UK

Fidelity Bank has agreed to take over the United Kingdom unit of Nigeria’s second oldest lender, Union Bank, the former said Tuesday.

It is the latest phase in the train of divestments by the latter which, beginning late last year, saw Union Bank offload 90 per cent of its shareholding to a new owner, Titan Trust.

Fidelity Bank will be acquiring Union Bank UK 100 per cent if the deal goes through, according to a binding agreement between the two stated in a regulatory filing published by the Nigerian Exchange and seen by PREMIUM TIMES.

Industry watchdog the Central Bank of Nigeria has sanctioned the deal with “No Objection.”

The deal allows SME-focused Fidelity Bank, which holds an international banking permit but has never operated outside its base Nigeria, inroad into the UK market where, in 1983, Union Bank first set foot to provide personal banking, treasury management, and structured trade and commodity finance services.

“The diverse service bouquet and business model of Union Bank UK offered 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,” said Fidelity Bank’s chief, Nneka Onyeali-Ikpe.

Union Bank of Nigeria itself came to life in 1917 in Lagos with Britain’s Barclays Bank as its precursor.

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

No mention has been made of the value of the deal but estimating it will likely go the route of enterprise value, which may require Fidelity Bank, as transactions like this usually demand, to draw fund from its cash reserves to acquire the shares of the target bank’s shareholders at a premium or debt could be sourced for that purpose.

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

The transaction puts the lender on course to attain a tier-1 status by 2025, by which time it hopes to have joined that elite league of Nigeria’s five biggest banks by assets sometimes called FUGAZ after their initials.

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

“While these are early days, we are happy to report that we are on track to meet our tier-one ambition as reflected in our financial results that have indicated significant growth on key reporting lines quarter-on-quarter,” Onyeali Ikpe said of the target she had set herself last year, shortly after she took office, a vow to deliver the honour of the bank being named among the industry’s biggest in four years.

That is a pointer that more acquisitions or mergers could follow to enable it to expand its asset base to measure up to tier-1 status preconditions.

Challenger bank Titan Trust caused the biggest upset in the Nigeria M&A scene last year when it announced the deal to take over centenarian Union Bank, an acquisition that was perfected this June.

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