Nigeria: Inside Titan Trust Bank’s planned acquisition of Union Bank 

By Temitayo Lawal
Posted on Thursday, 3 February 2022 19:37

Titan Trust Bank (TTB) is acquiring a majority stake in the century-old Union Bank of Nigeria in what is touted as one of the biggest merger and acquisition transactions in Nigeria late last year. What are the issues surrounding this deal, and who are the people behind the young bank TTB? 

In December last year, the news of the transaction reverberated through the financial industry. TTB, a bank established in 2019 and which is largely unknown on the national level, acquired a majority stake in Union Bank, which is Nigeria’s second-oldest bank.

TTB positions itself as a digital bank and hopes to harness Union Bank’s reach – 239 branches and about 1,000 cash points – to scale its “innovation-led model” of banking.

Although the leaders of both banks have said the process is still in motion and is subject to some critical regulatory approvals, the deal would make TTB the largest single shareholder in any of Nigeria’s publicly listed banks in terms of the percentage held.

Banking on history

Union Bank of Nigeria was established as a colonial bank in 1917 and nationalised in the 1970s. The government sold its 51.67% controlling stake to Nigerian private and corporate 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 Netherlands government’s development finance institution – Chandler Corporation and Standard Chartered Private Equity invested $500m during the bank’s recapitalisation exercise in 2012.

This 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). Toward the end of 2014, AMCON sold its 20% remaining equity in the bank to Atlas Mara, a financial services holding company.

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

The fine print

In a statement, TTB’s chairman Tunde Lemo, who is also the chairman of Flutterwave and a former deputy governor at the central bank, said: “The deal represents a unique opportunity to combine Union Bank’s longstanding and leading banking franchise with TTB’s innovation-led model, which promises to enhance the product and service offering for our combined valued customers.”

Union Bank’s leaders, through the chairperson Beatrice Bassey and CEO Emeka Okonkwo, also expressed similar sentiments.

However, a senior executive at the bank who requested anonymity told The Africa Report: “For now, the bank isn’t willing to make comment or talk about its merger with Union [Bank] due the fact that certain things haven’t been finalised.”

Some pending court cases against the acquisition are also a cause of concern among the investors. In June last year, Petro Union Oil and Gas Company filed a case at the Federal High Court in Lagos seeking to enforce a 2014 judgement, which asked the central bank and Union Bank to pay some $15bn to the company. There is also pending appeals in the case.

The money is to repay $3bn that the firm claims the defendants illegally took from it in 1995 and the accumulated interest since then.

Long legal proceedings

The basis of Petro Union Oil and Gas Company’s March 2012 originating case at a Federal High Court is that Union Bank and the CBN failed to honour a cheque it had procured from a branch of Barclays Bank in the UK. It sought to cash the cheque in order to “construct three petrochemical refinery complexes and a bank in Nigeria.”

Union Bank and the CBN claimed that they could not give value to the cheque not only because their investigation revealed that the company that issued the cheque did not exist on UK’s Register of Companies at that time and the cheque was issued five years after the account it was issued on had been closed.

Petro Union won the case in 2014, but Union Bank and the CBN filed separate appeals. The company again won Union Bank’s appeal in 2018 and the bank then proceeded to the Supreme Court, where the case is still being heard. The CBN’s appeal at the appellate court is yet to be determined too.

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

Case impact

A senior lawyer familiar with the matter but who prefers to be anonymous tells The Africa Report that although the litigant could file an appeal against the latest judgment, he doubts if that will ever happen because the judgment had made it clear that their case was a “misrepresentation and not the state of facts” as it was the shareholders transacting their shares, not Union Bank selling off its assets. However, he believes that the transaction is insulated even if they appeal.

Asked what the impact will be if other existing cases go against Union Bank, the lawyer says: “The pending appeals do not have anything to do with the transaction which is between the shareholders of Union Bank and TTB. Union Bank is not a party to the transaction, and its assets are not subject to the transaction. I do not foresee Petro Union winning, but even if they do against all odds, it won’t affect the validity of this transaction. At that time, the discussion may only turn on how the judgments would impact on the overall value of the bank’s assets.”

Although the banks have maintained their innocence and filed appeals, their lawyers told the court in this new case – which asks the judge to ensure the status quo and basically stop the acquisition of Union Bank shares by another party until its case is finally settled – that, among other things, the litigant does not have the powers to “prevent a shareholder of a company with which it is involved in litigation from selling its shares”.

The June 2021 case was dismissed, which gave Union Bank the ability to go ahead with its acquisition.

Small eats big

This is not the first time that a smaller bank will acquire a bigger one in Nigeria. It is however the first time that an unlisted bank, which is barely two years old, will be acquiring a listed, century-old bank.

United Bank of Africa (UBA) was formed out of a 2005 merger with and 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’s backers

This then begs some questions, like what is the financial capacity of the new bank and who are its backers?

An investigation by local finance publication, Nairametrics, revealed TTB’s backers and how TTB compares with Union Bank.

Source: Nairametrics – Facts and Figures: How Titan Bank compares with Union Bank

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

He continued: “The local shareholders own the balance, and shareholding is dispersed. My shareholding is therefore very tiny and insignificant. I am only providing leadership.”

A breakdown of TTB’s shareholding structure shows that Luxis International DMCC – with 28,090,400 shares – owns 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 reportedly 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.

TGI Group’s website says its business interests straddle “fast-moving consumer goods, agricultural inputs, industrial chemicals, homecare products and pharmaceuticals”.

Who’s who at TTB

Apart from 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, a non-executive director at the bank, is a former executive director at Zenith Bank;
  • Adaeze Udensi, an executive director, served as senior compliance officer at Heritage Bank;
  • And the bank’s chief financial officer, Mark Oguh, was the financial controller at Diamond Bank, which was acquired by Access Bank in 2019.

The institution is banking on the local executives who are familiar with the sophisticated and ever-evolving financial sector to help achieve its ambitions.

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