The seemingly ‘quietness’ on the consolidation status of Union bank, one of the oldest lenders which was acquired by Titan Trust Bank and said to be taken over by the federal government is causing disquiet in the industry.
From its takeover in early January and appointment of managing director and executive director alongside Polaris and Keystone Banks and its recovery by the federal government, based on the recommendation of President Bola Tinubu’s Special Investigator, Jim Obazee, last year, it has been a matter of conjecture on the future of the once thriving lender, which used to have greater impact on the economy, either in the area of its dominance in interbank liquidity assistance and management, intermediation or provision of manpower for appointments into critical positions even to the apex bank.
The burning questions within the industry are, whether the alleged takeover by the federal government is appropriate considering the government’s bent towards private sector drive of the economy, whether the relevant stakeholders, including shareholders have been carried along and whether public funds will be used to meet up the new Central Bank of Nigeria (CBN)s new capital requirements, among others.
But, while CBN was not forthcoming, the Securities and Exchange Commission (SEC) involved in its acquisition processes, provided some insights into status of the bank that continues to operate with inadequate board members.
With the current rat-race by banks to meet up the new capital requirements, some analysts say, the earlier the UBN issues are resolved the better, so as not to affect its capital mobilisation drive.
But the bank’s spokesperson, Ayotunde Omolayole, would not be dragged into the conversations about the future or status of the bank, insisting that the public would know its next steps in due course.
“Thanks for your interest in our financial institution. I’m not in a position to answer your enquiry but be assured that in due course Union Bank will duly inform the general public of its next steps,”Omolayole, in response to MBN’s Whatsapp message recently.
However, SECs spokesperson, Bagudu Waziri told MBN that following a no-objection disposition by the then Godwin Emefiele’s CBN and approval by the Commission, the process has since been completed, except for the consolidation of the two entities.
“The Central Bank of Nigeria granted its ‘No objection’ to the acquisition of Union Bank of Nigeria Plc by Titan Trust Bank Limited and the subsequent merger of the two banks. Following this, the SEC granted its approval to the transaction and the acquisition phase has since been completed, while the consolidation process of the two banks is ongoing,” Waziri, in response to the platforms enquiry.
Pressed further to comment on whether the two banks are still standing alone and the current situation, he added, “We have processes that must be followed.”
MBN further asked whether SEC has powers on share and offer prices of a company before going to the market, and if yes, how about a situation where offer price is higher than share price.
“In the past, when the Commission was operating a merit-based regulatory regime, the Commission was responsible for determining the pricing of securities. However, the Commission currently is operating a disclosure-based regulatory regime, which does not require the determination of pricing of securities. Pricing of securities is determined by both the issuing house and the company/issuer. The Commission is empowered to register and regulate the securities to be offered to the market. For a quoted company, price is determined by market forces of buyers and sellers of the company’s shares,” he said.
While analysts are watching with interests the likely action by the CBN on the lender, they are still divided on its current status and prospects.
According to one of the analysts, who has sufficient knowledge on the happenings, ”Titan has since acquired Union but the name “Union Bank” was adopted by the two parties because of the longevity and popularity of the Union Bank. The government owns Union Bank now and can recapitalise it.”
Speaking further, he said that the federal government special investigator was ”aware of the goings on in the acquisition process and the flawed ownership structure of the banks, but allowed them to merge before he moved for them. Secondly, there were discoveries that Emefiele massively used government funds in the whole transactions. So what Obazee simply did after the merger was to ask them to come and prove that the purported investors are actually, the owners of the bank. And which they could not. Before that time, Emefiele had forfeited his shares in both banks. One of the directors claimed to have N500m in the bank and he signed an agreement earlier that he forfeited the money and the shares. That’s why nobody could go to court to challenge Obazee on the takeover by the government.”
Neither Hakama Sidi-Ali, CBN’s spokesperson nor Auwalu Alhaji of the Corporate Communications department responded to MBN’s enquiries on the prospect of the bank.
But, the recent approval of financial accommodation by CBN to support the proposed merger between Unity Bank Plc and Providus Bank Limited has rekindled hope of brighter future for the bank as well as the other two lenders, Keystone and Polaris, which are still being superintended by the apex bank.
In the reckoning of CBN, its favourable disposition to forbearance to the embattled lenders was designed to bolster the stability of the nation’s financial system and avert potential systemic risks.