A Merger in Managing the Banking Sector - Case Study Example

Introduction When Prof. C. C. Soludo was appointed the Governor of Central Bank of Nigeria, he introduced what he called the 13 points agenda to reform the Nigerian banking industry, among the reforms was the consolidation of the banking sector. The main thrust of the consolidation was the increase in minimum capital base of commercial banks operating in the country from N2 bn to N25 bn (approximately $250m), and the banks were given 13 months to comply or forfeit their operational license. At the time of this policy change, out of the 89 banks operating in the country, only 3 banks effectively satisfied these requirements, they are First bank, Union bank and UBA (Okegbue and Aliko, 2004). This policy thrust was necessitated by perceived inadequacies of the banking industry in Nigeria. According to Adeyemi (n.d.) problems facing the Nigerian banks include ineffective and inefficient corporate base, generally small size banks with high overhead costs, heavy reliance on government patronage, insolvency, illiquidity, poor asset quality, weak corporate governance, boardroom squabbles, dwindling earns, and loss making on regular bases. These perceived problems according to Abdullahi (n.d.) will be corrected by mergers, acquisitions, consolidations and additional or increased capital base or structure. Mergers are similar to acquisitions in the sense that two companies coming together. However, mergers usually arise because neither company has the scale to acquire the other on its own. It’s friendlier in nature than acquisition (Lynch 1997). This external approach to expansion has received more attention than any other single type of strategy (Glueck and Jauch, 1984). The most important factors influencing these decisions included the availability of information which influenced the choice of the industry to enter and possible merger candidates (Dory, 1976). Mergers have been defined as the joining two companies to become one. According to Brealey and Stewart (1991), mergers can be horizontal, vertical or conglomerate. Horizontal mergers are for firms in the same line of business, example will be the merger between IBTC chartered bank and Stanbic bank Nigeria. Vertical mergers go backwards towards the source of raw materials or forward towards the customers. Conglomerate involves firms in unrelated line of business. Kazmi (2007) added another form which he called concentric mergers. This take place when there is a combination of two or more organizations related to each other either in terms of customer functions, customer groups, or the alternatives technologies uses, For instance, a footwear company combining with a hosiery firm making socks. While mergers is a viable options to extent and expand the size/frontiers of a firm, under the Nigerian banking laws, mergers have to be approved by regulatory authorities and the Courts before the can be effective and operational. Also there laws, the Company and Allied Matters Act (CAMA 1990) and the Investment and Securities Act (ISA 1999), these two laws provide the legal framework for mergers in Nigeria. The Securities and Exchange Commission (SEC), Nigerian Stock Exchange (NSE), Corporate Affairs Commission (CAC), and the Central Bank of Nigeria (CBN) are regulatory authorities for Bank mergers and finally the High Court. All mergers not in consonance with the above laws or not in approval by the above listed regulatory bodies are in effect ultra vires, and of no consequence. The Bank reforms are significantly designed to achieve, mega banks stature for Nigerian banks, reduction in the number of banks, increased compensation due to better incentives, and most importantly, the attraction of foreign investment into Nigerian banking industry, and others sectors of the economy from the perceived strong statures and added confidence in the ability of the banks to support the economy, generate employment and booster growth (Igberaharha, 2010). Brief history of IBTC Chartered Bank and Stanbic Bank Nigeria Two of the banks affected by the banking sector reforms in Nigeria are IBTC Chartered Bank and Stanbic Bank Nigeria, henceforth, IBTC and Stanbic respectively. IBTC Chartered Bank opened its doors to the public in 1989. A 100% wholly owned Nigerian bank by Nigerian citizens and institutions. Its areas of operations include corporate finance, financial advisory services, mergers and acquisitions, trade finance, and foreign exchange trading. Its profitability in the Nigerian banking arena is rated high and share holder earning are relatively high. The management prides itself on establishing and sustaining long term relationship. Stanbic has a longer history. Its parent company has been existence for over 100 years in South Africa. Its Nigerian operations started in 1987 under the name Stanbic Bank, which is a joint venture between Standard bank of South Africa and Nigerian investors. As a commercial bank it was relatively successful, operating in the Nigerian banking environment. But with the banking reforms of 2004, it was forced to re-strategize to be able to compete more efficiently and also meet customer demands. Today, the parent company has other diversified holding in other African countries, notable, Kenya, Angola, and Namibia. The Merger of IBTC and Stanbic Bank IBTC Chartered Bank Plc and Stanbic Bank (Nig) having signed Memorandum of Understanding (MoU) has agreed in principle to merge. The merger which dissolved Stanbic bank with all its assets and liabilities transferred to IBTC, while Standard Bank South Africa (SA) the parent company of Stanbic bank, will now own 51% shares in the new bank. Shareholders of the two banks are guaranteed cash payments for all or part of their holdings. The extra ordinary general meetings of IBTC have voted in favour of the merger, with an overwhelming majority of 99.9%. The merger has been approved in principle by the regulatory authorities of SEC, CBN, and NSE. The Federal High Court has also sanctioned the merging. In accordance with the terms of the merger. IBTC has now acquired the assets and liabilities of Stanbic Nigeria, and Stanbic Nigeria stands dissolved. Standard bank is buying of IBTC for N16 per share, which is a 45% increase in its quoted price of N11 per share. This tender offer presents a great increase in its quoted price. This means that IBTC 12.5 billion shares will be added an extra 6.250 billion newly issued allotted to Standard bank in exchange for transfer Stanbic into the new bank. This will represent 33.3% of the enlarged bank, which after the tendering agreement will translate to 50.1% in IBTC. The new Stanbic IBTC Bank Plc is active within the three business segments of the Nigerian economy. It is involved in private or individual banking, providing banking and financial services to individual customers; business banking services that takes care of small and medium sized firms; and also corporate banking, which focuses on institutional clients. The banks services includes savings, current accounts, project finance, credit cards, short and long term loans, online banking, and money market services, and so forth. These services are carried out through its subsidiaries, which include Stanbic IBTC Ventures Ltd, Stanbic IBTC Asset Management Ltd, Stanbic Nominees Nig. Ltd, Stanbic IBTC Stockbrokers ltd, Stanbic IBTC Trustee Ltd, and BR Resources Ltd. Since the merger, business has been really good, as the enlarged IBTC is optimizing the strategic benefits of its enlarged capital base and size. Just this year, it was part of a consortium in a $250m USD loan for long term loan for supply of gas pipeline project in Akwa Ibom State of Nigeria. Also part of the consortium in $2bn loan to MTN Nigeria. Also, latest reports indicate that Q3 profit is in excess of N10 .05 bn (Appendix I). Court Ruling In accordance with CAMA 1990, and other relevant laws in existence in Nigeria the Federal High court in Nigeria, and High Court in South Africa, ruled that the parties having satisfied the requirements of the laws are free to proceed with the merger. The Federal High Court has directed through an order that meetings of the shareholders of IBTC and Stanbic Nigeria be convened for the purpose of considering and if thought fit, approving the Scheme of merger. The Court directed meeting in effect gave the shareholders the opportunity to ratify by a majority representing three-fourths of the shares of the shareholders present and voting either in person or by proxy at the respective Court ordered meetings; all conditions precedent in respect of the Tender Offer and the proposed scheme have been fulfilled. Advantages of IBTC and Stanbic Merger Every merger agreement has several advantages to the participants. The IBTC Stanbic merger is an agreement involving 3 different corporate organizations, from 2 different countries, IBTC and Stanbic from Nigeria, and Standard Bank of S.A. from South Africa. The merger is more of a child of necessity. For without it, the operational license of the banks would have been withdrawn at the end of 2007, in consonance with the banking sector reforms. So the major advantage was their continued existence as corporate entity. Other benefits from the merger included cash payments to stockholders of IBTC to surrender their holdings and dilute their holdings, as Standard Bank SA, now has 50.1% of the new IBTC. Also there is the injection of additional capital into the Nigerian economy, which will boost economic growth. There is also the issue of financial rewards to shareholders. Studies have shown that mergers generate substantial gains to acquired firms’ stockholders (Jensen and Ruback, 1983). Other indirect benefits include elimination of competition between the two firms; added capital base; increase rate of growth at a faster rate, benefits from tax legislation, as the two entities will now be taxed as one, and many more advantages. Problems with the merger The major problems with the merger came from the shareholders of the IBTC chartered bank. Their national pride and loyalty made them not to want to sell initially to Standard Bank of S.A. But this hurdle was overcome when Standard Bank offered to pay N16 for each share that was trading for N11 at the stock exchange, besides offering to pay cash for all or part of it; this significantly increase the share price from N4 in pre MoU era to N11 as the time of signing. Studies has shown that share prices generally fall when stock financing mergers are announced, while there is gain in cash financed deals (Asquith, Brunner and Mullins 1990). Other problems included managerial issues. How was the management position in the new firm to be composed? Which staffs were to be laid off, and which ones to be retained? Which branches are to be closed and which ones to keep open? In the Court directed merger meetings, all this issues were resolved, and as such the merger was approved by Courts both in Nigeria and South Africa. Studies has shown that productivity declined in the years following merger (Ravenscroft and Scherer, 1988), but this merger has continued to prove its economic benefits (Appendix I) Economic theory of merger There are many reasons for mergers including psychological reasons. Many mergers have been disappointing in their results and painful to their participants. These failures have been attributed largely to rational financial, economic, and managerial problems (Levinston, 1970). The economic theory of mergers simply states that every action must be supported by economic considerations. Meaning that mergers like all other decisions of companies must first of all, satisfy the economic purpose. According to Breasley and Stewart (1991) the first thing to think about is whether there is an economic gain from the merger. There is an economic gain only if the two firms are worth more together than apart. Gain = PVAB – (PVA + PVB) must be positive. Where A and B represents the two firms involved in the merger. Secondly the cost of acquiring B Cost = Cash - PVB. The gain and cost of merging must justify the reason for the merger, if not, it is worth not undertaking. Other economic theories supporting mergers, include monopoly theory, economies of scale, market share theory. Monopoly theory indicates that firms will prefer to operate in a monopolistic environment than in a perfect competition. As such, they would tend to merge to operate as a monopoly. Mergers and Antitrust Laws Most countries in the world have antitrust laws and Many states do try to prevent mergers (Friedman 1978). This laws work to prevent the economic theories of mergers. In the US, mergers can get bogged down in the Federal Antitrust law. This laws are enshrined in three principal statutes. The Sherman Act of 1890, which declared that every contract, combination or conspiracy to restrict trade is illegal, and anyone who attempts to monopolies trade is acting illegally. The Federal Trade Commission Act of 1914 which prohibits unfair methods of competition. The Clayton Act of 1914 which forbids acquisition of assets which may lessen competition (Brealey and Stewart, 1991). In Nigeria, there is the Companies and Allied Matters Act (CAMA 1990) and the Investment and Security Act (ISA 1999), and other regulatory bodies to ensure that the economic theory principle does entirely influence merger decisions. Implications to the Industry The implications of the merger to the entire industry are multifarious. First, there is the brand implication. The two merged corporations will start trading as one entity. There has to be changes related to brands, for instance not only IBTC and Stanbic bank is affected but every other bank. Names has to be changed, logos, messages, marketing jingles and so on, all has to carry on with fresh brand identity. Secondly, there will be reduction in the number of banks in the entire country. Before, 89 banks were effectively operating in the country. With the banking reform, the banks were effectively reduced to 25 (Appendix II) newly structured banks with enhanced capital structures. Again, and most importantly, according to Soludo (2007) the era of failed banks and liquidity problems with banks will become things of the past. The enhanced capital structure will provide adequate cover for customers’ funds, and also booster confidence in the economy. Finally, the banks can now compete effectively in the world arena. Before the consolidation, none of the 89 banks license to operate in Nigeria was included in the first 100 banks in the world, but Nigeria size, potentials, and economic capabilities necessitates that such should be the case, this has resulted in lack of patronage from foreign investors both in the banking sector, and other sectors of the economy, it is expected that the reform agenda will effectively correct this anomaly. Since there reform is mandatory for all banks, none can give the excuse of lack of capital to engage in merger. As financing alternatives exist. If the purchase price cannot be met with existing resources or direct borrowing, creative financing options are available. Firms can and do borrow on the target company’s assets and cash. This technique is known as leverage buyouts or bootstrap acquisitions (Stancil, 1977, Rosenblom and Howard, 1977). Importance of Mergers in the banking industry Consolidation means a lot more than mere shrinking in size of an entity. With respect to the Nigeria, consolidation means mergers which will enhance synergy, improve efficiency, induce investor focus and trigger productivity and welfare gains (Nnanna, 2004). With respect to Nigeria, Soludo (2004) posits that the largest bank in Nigeria has a capital base of $298million compared to US$526million for the smallest bank in Malaysia. This has resulted in heavy fixed costs and operating expenses, as 5 or more banks that would be better synergized as one are operating as 5 different entities. With mergers, it is expected that benefits of synergy can be fully utilized. Breasley and Stewart (1991) has stated that the first reason for mergers are economic gains, this is exemplified when two or more firms operating as one earns more income than when they are running separate operations (Synergy). This means revenue enhancement. A merged firm pulls its resources together to market products and services of the firm, thereby reducing the unit cost of reduction. Apart from the perceived advantages of mergers and bank reforms, Tadesse (2005) posits that there is an underlying change in bank technology that has increased the minimum efficient size as well as favoured large banks to small one. This means that advancement in technology, mergers would remain preferred option for cost effectiveness and business growth. Conclusions This paper has analyzed mergers with respect to the banking industry in Nigeria. Special emphasizes was given to the merger between IBTC Chartered Bank and Stanbic Bank, the MoU signed between the directors of these two companies was examined and critically analyzed. Brief histories of the companies were given, and what necessitated the merger was also stated. From the foregoing, it can be seen that mergers though a veritable means for expansion and growth in an industry, at times, mergers could result from government policies, in which case, corporations concerned have to choice, either to fold up shop, or join others in order to stay alive. Merger agreements mean giving up significant autonomy and control, but when juxtaposed with folding shop, the responsibilities to customers and employees require the option of merger be followed. However, the banking industry is better off today, with the government imposed reforms. The benefits are being enjoyed by the banks, their shareholders and the economy at large. References Abudullahi, B. (n.d.) Banks Consolidation and N25bn Recapitalization -Another Perspective. available at http://www.gamji.com/article6000/NEWS6057.htm Adeyemi, K. S. (n.d.) Banking Sector Consolidation In Nigeria: Issues And Challenges. Available at http://www.scribd.com/doc/11846500/Banking-Sector-Consolidation-in-Nigeria-Issues-and-Challenges-by-Dr-SK-Adeyemi-Executive-Director-Union-Bank-of-Nigeria-Plc Asquith, P., Brunner, R. F. and Mullins, D. W. (1990). Merger Returns and the Form of Financing. Working Paper MIT Sloan School of Management. August, Table 4. Brealey, R. A. and Stewart, C. M. (1991). Principles of Corporate Finance. 4th Ed. New York: McGraw-Hill Inc. Dory, J. P. (1976). The Domestic Diversifying Acquisition Decision. Thesis, Harvard University, Cambridge, Mass. Friedman, H. M. (1978). The Validity of Tender Offer Statutes. Mergers and Acquisitions. (Spring) pp. 4-16. Glueck, W. F. and Jauch, L. R. (1984). Business Policy and Strategic Management. 4th ed. Singapore: McGraw-Hill Inc. Igbheraharha, E. (2010) The Effect Of Bank Consolidation On The Performance Of Banks In Nigeria. Available at: http://www.articlesbase.com/banking-articles/the-effect-of-bank-consolidation-on-the-performance-of-banks-in-nigeria-1841090.html#ixzz17hN9o3Mf Jensen, M. C. and Ruback, R. S. (1983). The Market for Corporate Control: The Scientific Evidence. Journal of Financial Economics 11: 5 – 50. April. Kazmi, A. (2007) Business Policy and Strategic Management. New Delhi: McGraw-Hill Inc. Levinston, H. (1970). A Psychologist Diagnosis Merger Failures. Harvard Business Review. March-April. Lynch, R. (1997). Corporate Strategy. London: Pitman Publishing. Nnanna, O. J. (2004), “Beyond Bank Consolidation: The Impact of Society” A Paper Presented at the 4th Annual Monetary Policy Conference of the Central Bank of Nigeria. Abuja, 18th – 19thNovem ber. Okagbue, S. N. and Aliko, T. B. (2004). Banking Sector Reforms in Nigeria Friday, December 10, available at http://www.imakenews.com/iln/e_article000336415.cfm?x=b11,0,w Ravenscroft, D. J. and Scherer, F. M. (1988). Mergers and Marginal Performance. In J. C. Coffee, Jr., L. Lowenstein and S. Rose-Ackerman (eds.) Knights, Raiders and Targets: The Impact of Hostile Takeover. New York: Oxford University Press. Rosenblom, A. A. and Howard, A. A. (1977). Bootstrap Acquisition and How to Value Them. Mergers and Acquisition. Vol 11, No. 4 (Winter) pp. 18-26. Soludo, C. C. (2007) Central Bank of Nigeria to re-denominate the Naira Currency. Financial Nigeria. Available at http://financialnigeria.com/NEWS/news_item_detail_archive.aspx?item=112 Stancil, J. M. (1977). Search for Leverage Buyout. Harvard Business Review. July-August. pp. 11-12. Tadesse, S. (2005). “Consolidation, Scale Economics and Technological Change in Japanese Banking.” University of South Carolina, Columbia.http://ideas.repec.org/p/wdi/papers/2005-747.html. Appendix I Financial Performance of new Stanbic IBTC Bank Earnings Per Share Periods 2008 2009 September December 0.06964 0.22658   Note: Units in Nigeria Naira Valuation Ratios   Company Industry Sector S&P 500 P/E Ratio (TTM) 22.31 17.66 30.20 17.67 P/E High - Last 5 Yrs. -- 0.49 0.82 20.00 P/E Low - Last 5 Yrs. -- 0.13 0.18 4.97 Beta 1.34 1.24 1.19 1.28 Price to Sales (TTM) 3.88 3.61 6.37 2.14 Price to Book (MRQ) 2.12 1.09 1.41 2.88 Price to Tangible Book (MRQ) 2.12 1.38 1.66 7.73 Price to Cash Flow (TTM) -- 5.09 11.65 10.89 Price to Free Cash Flow (TTM) -- 1.31 5.76 49.18 % Owned Institutions -- -- -- -- Dividends   Company Industry Sector S&P 500 Dividend Yield 3.30 1.78 1.78 1.64 Dividend Yield - 5 Year Avg. -- 1.91 1.63 2.48 Dividend 5 Year Growth Rate -- 8.15 7.97 -6.66 Payout Ratio(TTM) 73.55 19.71 30.52 38.32 Growth Rates   Company Industry Sector S&P 500 Sales (MRQ) vs Qtr. 1 Yr. Ago 59.82 5.22 14.36 9.48 Sales (TTM) vs TTM 1 Yr. Ago -0.13 2.56 16.55 8.95 Sales - 5 Yr. Growth Rate -- 16.68 20.26 9.86 EPS (MRQ) vs Qtr. 1 Yr. Ago 225.36 478.08 297.85 7.07 EPS (TTM) vs TTM 1 Yr. Ago -33.86 -- -- -- EPS - 5 Yr. Growth Rate -- 6.50 11.52 6.94 Capital Spending - 5 Yr. Growth Rate -- 10.57 11.63 4.84 Financial Strength   Company Industry Sector S&P 500 Quick Ratio (MRQ) -- 0.00 0.31 0.67 Current Ratio (MRQ) -- 0.00 3.17 0.99 LT Debt to Equity (MRQ) 15.71 58.08 102.40 119.24 Total Debt to Equity (MRQ) 15.71 201.11 212.13 174.06 Interest Coverage (TTM) -- 0.00 -4.74 18.85 Profitability Ratios   Company Industry Sector S&P 500 Gross Margin (TTM) -- -0.00 13.36 32.61 Gross Margin - 5 Yr. Avg. -- 0.01 13.41 28.99 EBITD Margin (TTM) -- -- -- -- EBITD - 5 Yr. Avg -- 0.02 12.00 18.41 Operating Margin (TTM) 23.52 16.87 22.14 -- Operating Margin - 5 Yr. Avg. -- 24.85 27.07 16.20 Pre-Tax Margin (TTM) 23.52 21.65 34.38 14.91 Pre-Tax Margin - 5 Yr. Avg. -- 25.40 27.40 15.82 Net Profit Margin (TTM) 18.51 15.32 28.72 11.09 Net Profit Margin - 5 Yr. Avg. -- 17.77 20.94 11.61 Effective Tax Rate (TTM) 21.31 32.59 346.17 50.05 Effecitve Tax Rate - 5 Yr. Avg. -- 29.05 42.49 25.17 Efficiency   Company Industry Sector S&P 500 Revenue/Employee (TTM) -- 56,244 30,497,324 674,345 Net Income/Employee (TTM) -- 658 3,974,453 85,125 Receivable Turnover (TTM) -- 0.00 11.97 10.31 Inventory Turnover (TTM) -- 0.00 3.52 6.73 Asset Turnover (TTM) -- 0.00 0.07 0.55 Management Effectiveness   Company Industry Sector S&P 500 Return on Assets (TTM) 2.35 0.37 1.09 5.99 Return on Assets - 5 Yr. Avg. -- 0.84 1.52 5.75 Return on Investment (TTM) -- 0.00 1.01 7.69 Return on Investment - 5 Yr. Avg. -- 0.00 1.30 7.43 Return on Equity (TTM) 9.49 5.65 6.47 18.09 Return on Equity - 5 Yr. Avg. -- 12.13 11.21 9.21 Source: Reuters 2010. http//in.reuters.com/finance/stocks/http://in.reuters.com/finance/stocks/financialHighlights?symbol=IBTC.LG Appendix II New 25 Banks operating in Nigeria 1. UBA: The bank which emerged after the fusion of former United Bank for Africa and former Standard Trust Bank is already there. With over 400 branches spread across the country, it wants to be a neighbourhood bank in Nigeria as well as in the African region. 2. First Bank: First Bank is planning to acquire some smaller banks as well as extend its boundaries beyond Nigeria. Its deal with Ecobank Transnational Incorporated (ETI), the parent company of Ecobank Nigeria Plc, with a view to consolidating with the group, would enable it capture the West African markets. However, ETI is said to be ready to inject funds into Ecobank Nigeria to meet the N25 billion new capitalization mark. 3. Union Bank: Union has accepted in principle to take some small banks along with it. Already, Union Bank, Broad Bank, UTB, Hallmark have filed an application to the CBN for approval in principle of their merger arrangements. 4. Zenith Bank: Zenith is going it alone while also scouting for any smaller ones that may add value to its brand and operations but most importantly, fit into its business plans and philosophy. 5. Guaranty Trust Bank: GTBank was one of the few banks that never had problems with the CBN threshold. With subsidiaries in some West African countries, it is realigning to battle the region with others. 6. Intercontinental Bank: The Intercontinental Group is now operating as a single entity. The bank has therefore become the second consolidated bank in the country after the UBA and with the largest shareholders' fund. 7. Standard Chartered: With a new investment of about $200 million, the bank is set for recapitalisation. The new financial position of the bank is expected to be announced soon as it would submit to the CBN for approval its financials which is presently going through audit. 8. Oceanic Bank: After the completion of the verification of capital exercise by the CBN, the bank now has about N26.5 billion as shareholders' fund has acquired two banks. Significant growth in shareholders' fund is expected from its recently concluded 2005 financial year. 9. Access Bank Plc: The bank last week emerged the third consolidated bank with a combined capital base of N28 billion. 10. Afribank Group: Having concluded due diligence on Afribank International (Merchant Bankers) Limited, Trade Bank Plc and NNB International Bank, Afribank Nigeria Plc has applied to the Central Bank of Nigeria (CBN) for approval in principle on the three banks. Also, Afribank has begun the initial valuation on the three banks to determine the share exchange ratio. IMB International Bank has also joined the group. 11. IBTC Chartered: The bank which was to go it alone has now received CBN merger consent to merge with Chartered Bank and Regent Bank. This is expected to bring their shareholders' fund to a little over N35 billion. The group last week filed for CBN's approval-in-principle. 12. Diamond Bank Group: Diamond Bank has finally acquired Lion Bank having received final approval of the regulatory authorities last week. With this, its Shareholdersâ?? Fund now stands at about N28 billion and is expected to go up to about N31 billion at the end of this exercise. 13. Skye Bank Group: All appears set for the take-off of Skye Bank Plc (in formation) as combined shareholders' funds of the merging banks, that is, Prudent Bank Plc, EIB International Bank Plc, Bond Bank and Reliance Bank is now close to about N30 billion. The group should get CBN's approval-in-principle soon so it can move to the next stage. A new entrant into the group is Cooperative Bank which joined last week and would be coming on board with about N5 billion in shareholdersâ?? fund subject to CBNâ??s verification of the last capital raised. 14. Wema/National Bank Group: Comprises Wema Bank, National Bank, Fortune Bank and Lead Bank, the group is well positioned to meet the requirement. Wema Bank recently garnered gross proceeds amounting to N16.64 billion at the end of its public offer and added to an initial shareholders' fund of N8.06 billion would put it at about N24.7 billion. 15. FCMB Group: Comprises First City Monument Bank and Co-operative Development Bank and has now got a date for Court ordered meetings. The group is finalising arrangements with NAMBL. With a shareholders' fund now in excess of N27 billion, the group is set to conclude all necessary regulatory requirements and fuse into one before the end of November 2005. 16. Platinum Bank: - Platinum Habib Group Friday filed for CBNâ??s approval in principle. The fusion of the two banks would produce over N25 billion capital base. 17. Fidelity Bank: The bank now has FSB International Plc and has received the CBN approval-in-principle on their merger pact. It has also received pre-merger consent of the CBN for its acquisition of Manny Bank. 18. NIB/Citibank: The Citigroup has made the decision in New York to capitalise the bank and this is being driven, according to information, by the number of transactions in the oil and gas industry which it wants to retain and also the new deals in the deepwaters. It is only a matter of the fund getting into Nigeria. 19. Sterling Bank Group: This group had consisted of Trust Bank of Africa Limited, Magnum Trust Bank and NBM Bank, but has now included NAL Bank Plc and Indo Nigeria Bank. Presently, the group has over N25 billion capitalisation funds distributed among members and is finalising all necessary arrangements for the merger with their various shareholders. 20. First Inland Bank: Comprising First Atlantic Bank Plc and Inland Bank (Nig) Plc, the group has entered its final stages with the Court-Ordered Meetings of shareholders of both banks scheduled to hold October 26, 2005. The meetings are scheduled for Lagos and Abuja respectively after which it would seek regulatory authorities' final approval. CBN last week ratified proceeds of the public offer by First Atlantic Bank Plc, approving N6.16 billion worth of the investments. 21. First North Bank: As a result of the N38.2 billion forbearance given to Bank of the North, the bank's book is now looking positive. BON, NUB and New Africa Bank are merging to form First North Bank Plc. With NUB's N4 billion as well as some interests which some Northern investors have declared in the bank, in addition to the funds coming in from New Africa Bank, the group looks good to cross the Rubicon. 22. Devcom/ETB: Equitorial Trust Bank and Devcom Bank are recapitalising its operations mainly through private placements by existing shareholders (rights issue), and retention of profits. It has through private placement and recapitalising of its profits generated inflows totaling N26.5 billion, though N9 billion is awaiting CBN verification. It is expected that it would eventually surpass the minimum requirement. 23. Citizen Guardian: The group comprises Citizens Bank, Guardian Express Bank, ACB and Manny Bank. While Citizens and Manny pulled out of an earlier arrangement with Union Bank, Guardian Express also pulled out of an earlier arrangement with Platinum Bank. The group hopes to have a combined shareholders fund in excess of N27 billion. 24. Unity Bank Group: Unity Bank Plc include in its merger process Intercity Bank Plc, Tropical Commercial Bank Plc, Pacific Bank Limited, First Interstate Bank Plc and Centre Point Bank Plc. The group has received the Central Bank of Nigeria (CBN)'s approval in principle. Read More