LAGOS—Five banks will, today, perfect their merger arrangement by signing a Memorandum of Understanding (MOU) to enable them fuse into one big bank. They are Prudent Bank, Magnum Trust Bank, Eko International Bank, Trust Bank of Africa and NBM Bank. Each of the banks in the deal is expected to raise its capital base to N5 billion.
Consequently, the bank to emerge is targeting a minimum capital base of N30 billion for a start. The merging five banks have up to March 2005 to wind up their individual operations. Already, Prudent Bank is in the range of N5 billion shareholders fund.
Discussions on merger plan among the banks were said to have started between Prudent Bank and Chartered Bank and the group was enlarged to include Capital Bank and the four that are slated to sign the MOU today. As the talks progressed, Chartered Bank and Capital Bank were said to have opted out because of some differences in culture, technology and other related issues that may make the fusion unworkable. At press time, two other banks were making effort to join the merger train of the group but were dropped to make the group manageable.
In the process of the merger talks, the pioneering members of the group were said to have drawn up a list of requirements that would make the merger workable. Each of the intending members of the merger was required to have some core competence that would complement the others.
Prudent Bank, it was learnt, met the criteria because of its size, capital base, and competent management. It thus became a rallying point for others in the group. Magnum Trust Bank was said to have made the group because of its size, core competence in capital market operation and its experience in retail banking. For NBM Bank, it was because of its international affiliation with Fortuse, one of the global players in international market place. Its selection by the group is to provide international network for the bank to emerge from the group in international financing.
The group favoured Eko International Bank because of its connection with the Lagos State government. The group, it was learnt, believed that public sector funds will continue to be a key factor in deposit mobilisation in Nigeria and as a result a bank like Eko International with its link with public sector will assist the group in that respect in the near future.
Today's MOU is the forth in a series of merger arrangements being put in place since the CBN came up with the consolidation idea on July 6, this year. The first was First Consolidation led by Allstates Trust Bank in which Hallmark Bank, Gulf Bank, Lion Bank and Universal Trust Bank signed a merger MOU. This was followed by the Intercontinental Group arrangement in which Intercontinental, Gatewaybank, Global Bank and Equity Bank in the same family because of cross share ownership structure of the group agreed to dissolve into one entity at the end of the current financial year.
The third was last week's MOU by Assurance Bank, Manny Bank, Guardian Express, First Atlantic Bank. The consolidation fever is catching up with every bank. Like Mr. Emmanuel Ihemedu, Executive Director, Assurance Bank, said, if by any stroke of ill luck Prof. Charles Soludo turns his back on bank's consolidation, there is no going back for banks because most bankers are tired of being marginal players in the market place.
