Zenith, First Banks in merger talks

Another serious merger or acquisition is imminent in the Nigerian banking sector as Zenith Bank Plc and First Bank are said to be eyeing smaller banks in the industry to build their asset and capital bases.

Blueprint gathered from reliable sources within the industry that talks are currently ongoing between Zenith Bank and Union Bank, and a tentative arrangement may have been reached to commence due diligence.

While both banks are yet to confirm or deny the merger, the source revealed that talks have reached final stage, and that official statement may be issued any moment from now.

Recall that 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.

Deals like these are typically not confirmed until the clearance is obtained from the Securities and Exchange Commission.

It is not immediately clear why both banks will be considering a merger, however, Union Bank owners Atlas Mara with a 49 per cent 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.

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.”

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.

According to findings, 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.

In a notification that was sent to the Nigerian Stock Exchange (NSE), the banking group recorded a 10.3 per cent 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.

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.