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STB acquires N13.3bn stake in UBA

Posted by Layi Adeloye on 2005/06/06 | Views: 1624 |

STB acquires N13.3bn stake in UBA

THE Standard Trust Bank Plc has acquired N13.3billion shares in United Bank of Africa Plc.

THE Standard Trust Bank Plc has acquired N13.3billion shares in United Bank of Africa Plc.

According to sources in Lagos on Sunday, “The bloc shares in UBA had been a target of local and international investors for some time before the July 6, 2004 announcement of plans by the Central Bank of Nigeria to reform the banking industry.”

The sources said the determination to acquire the shares prompted STB to float a public offer on the Nigerian Stock Exchange in January 2004, which grossed N14billion.

One of the sources said, “The major purpose of the public offer was to raise enough funds to purchase the bloc of UBA shares that had been the target of the competing local and foreign banks.

“The offer was fully subscribed and the sum of N13.3billion of the offer proceeds was used by STB to secure the UBA shares and thus ensure that the proposed merger is not derailed by competitors.”

The agreement by UBA and STB to merge took the financial industry by surprise.

Industry watchers, however, saw the move as an eye-opener to a combination of possibilities, which everyone had thought could not materialise or had ignored.

The merger agreement subsequently made the CBN to immediately put a stop to further mega mergers.

There were intelligence reports that some other top 10 banks were seriously contemplating putting up competitive responses to the STB/UBA move.

In recent times, analysts have been expressing worries over the spate of disintegration in proposed marriages among banks.

The analysts, nevertheless, fingered the hurried nature of Memoranda of Understanding signed as a major problem with the broken-down corporate marriages.

“In some instances, some of these corporate marriages appeared to have been consummated hurriedly without properly conducting due diligence,” an analyst explained.

But a top STB source said that the merger between STB and UBA had created a clear departure from the failing trend.

He said, “It is one merger that has distinguished itself in all standards. This is a combination of Nigeria’s third and fifth largest banks, which were both capable of meeting the N25billion requirement on their own.

“The sheer size of the merger and the homogeneous potential of the emerging bank were simply inconceivable, prompting many people to say that, perhaps, the directors of the two banks had over-reached themselves and that they were doomed to fail.”

He, however, noted that current events showed that “this is one merger that appears to be progressing quite impressively and blazing the trail in many fronts for others.”

UBA and STB had earlier in the year announced their plans to merge. They also agreed to adopt UBA as their new name, while designating the Managing Director of STB, Mr. Tony Elumelu, as the chief executive officer of the new UBA.

The fusion of UBA and STB is expected to produce an entity that will contend for the top spot in the Nigerian financial service space, measured by the size of the combined assets base which is over N50billion.

The combined profitability of the banks stands at approximately N10billion.

The branch network is about 400.

UBA ranks numer three in the country’s banking industry, following First Bank Nigeria Plc and Union Bank Plc. STB ranks number five.

The Punch, Monday, June 06, 2005

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Comments (1)

Fay(Katy, Texas, US)says...

Actually translates to bravehearted.