All Talk, No Deal

Ekpe noted that the proposed combination would strengthen their leading position in the African banking industry. He considered it a win-win proposition for First Bank, Ecobank, their shareholders, employees and customers. Jacobs Moyo Ajekigbe, Group Managing Director of First Bank of Nigeria added that together they would be better positioned to exploit the significant strength of both institutions by building a truly regional financial power house. First Bank was strategising to achieve its set target by extending its strong retail capability, expanding its international reach and strengthening its capability in investment banking. The ultimate goal is to create an internationally competitive world class mega brand. After all the hype on merger, the two banks, in a statement, announced the proposal has hit the wall. But the statement was silent on why. This magazine, however, scooped that it was not unconnected with share valuation and management structure. The fresh fund will be used to capitalise some affiliates and finance technological transformation, as well as drive new acquisitions. The bank intends to raise the capital through the three stock exchanges where it is listed – Lagos, Accra and Abidjan. There was yet another failed deal which involved Ecobank Nigeria and Sterling Bank. Moment after Ecobank Nigeria and Unity Bank proposed merger collapsed, Ecobank signed another MOU with Sterling Bank plc. Speaking in April this year, Mr. Yemi Adeola, Group Managing director/Chief Executive Officer of Sterling Bank remarked that Sterling and Ecobank merger plan had seen due diligence carried out while valuation discussion was on. He said it is only after valuation they will know whether the merger is for real or not. If one party feels grossly undervalued, the possibility of discontinuing with the plan is there. But the Chief Executive noted that that should the merger fail, it would be purely based on professional reasons. As it turned out, the marriage proposal collapsed in the early weeks of May due differences over shares valuation. While Sterling bank demanded for a 45 per cent stake, Ecobank Nigeria offered it 40 per cent. When the discussion commenced, Ecobank had shareholders’ funds of about N30 billion as against Sterlings’ N25 billion. When the NSE was lifting the technical suspension placed on the two banks as merger discussion lasted, the Exchange remarked that the collapse was due to irreconcilable technical differences. Of course, the collapsed deal between Ecobank Nigeria and Unity Bank plc is still fresh in the nation’s banking industry. While addressing journalists at the Annual General Meeting of Unity Bank held in Katsina in November last year, Malam Falalu Bello, Managing director/Chief Executive Officer of the bank disclosed that Ecobank winked at them and they winked back at them, and they started to talk, but that Unity bank has some home keeping to do. He said when Unity Bank became ready, perhaps Ecobank could not wait for them to finish their home keeping. Suddenly the bank learnt that Ecobank has started discussion with Sterling Bank. The bank boss said that Unity Bank shareholders are of the insistence that the bank should stand alone. Bello posited that majority of the shareholders don’t want them to merge with just any bank. The shareholders opted for raising fresh funds from the capital market to uplift the bank’s capital base. To become stronger, the bank plan to raise the sum of N50 billion from the nation’s capital market. According to Bello, if he can raise sufficient money through public offer to modernise branches and hire good staff, why merger with any bank. He said at that stage, he can easily approach any interested foreign bank to come to Nigeria and take 40 per cent equity in the bank. That he said will bring him additional funds as well as additional expertise. The two banks had on Wednesday 9 May last year signed an MoU. That incident reinforced Professor Chukwuma Soludo, Governor of the Central Bank of Nigeria’s positive expectations on the future of the industry. The arrangement was expected to be actualised in three months, which indeed would have been the first of its kind in Nigeria. On fruition, it would have produced a fairly big banking franchise not only in Nigeria but in the whole of Africa, given the fact that ETI, parent company of Ecobank Nigeria operated in 18 African countries at that time. ETI was expected to facilitate expansion of the enlarged bank into the global financial market. Mr. Offong Ambah, managing director of Ecobank Nigeria said at the signing of MoU that the proposed merger was entirely induced by their common vision, which aligns with Ecobank’s Strategic intent of being among the top three banks within any country it operates. To Falalu Bello, his counterpart at Unity Bank, the agreement is the realisation of a dream for Unity Bank which has been striving to create a truly national franchise. He noted that the new move would make the bank an international player. John Odeyemi, Chairman of Ecobank Nigeria opined that the emerging bank would be entirely beneficial to stakeholders of the two banks as the emerging bank was targeting a N400 billion asset base, over 340 branches and a combined shareholders’ fund in excess of N95.5 billion by March 2007. But with these series of merger collapse, stakeholders remain confused as to when Ecobank Nigeria will actualize its intention of being among the top three banks in the country.