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Five more
banks join merger train
By Mojeed Jamiu
Finance
Editor
Mergers and acquisitions are
thriving on the financial market, despite the hue and cry about their
consequences on job losses and other real and perceived negative
outcomes.
In the latest buzz, five more
banks � Prudent, Magnum Trust, EIB International, NBM and Trust � will
today join the bandwagon of consolidators as they sign a Memorandum of
Understanding (MOU) to presage their merger and head off the trouble of
undercapitalisation under the new rules.
It brings to four the number
of such consolidations in the system, in a bid to meet the N25 billion
capital base set by the Central Bank of Nigeria (CBN) to reign from
January 2006.
Prudent Bank was said to have
tasked its staff to raise its shareholders� funds to N5 billion so as to
put it in good stead in the merger talks.
Another set of five banks
(Allstates Trust, Gulf, Hallmark, Lion and Universal Trust) blazed the
trail when they agreed on an alliance with the signing of an MOU as a
forerunner to their merger subject to CBN approval. The outfit will be
called First Consolidated Bank of Nigeria.
Later, four banks banded
together when they signed an MOU to form one big bank under the
Intercontinental Group. They are Intercontinental, Gateway, Global and
Equity.
Another group of four banks
last week defied the strike action called by the Nigeria Labour Congress
(NLC) to sign an MOU in Lagos, under the name Astrabank. They are First
Atlantic, Guardian Express, Manny and Assurance.
The new bank, with a total
capital base of N11 billion, plans to hit the N50 billion mark by March
next year as well as push for a settlement bank status.
For now the sure bets for the
mega bank status include First Bank, Union Bank, UBA, Zenith Bank,
Guaranty Trust and Standard Trust; they are also the natural first choice
for settlement banking.
As events unfold on the
financial market, there are indications that Diamond Bank, Citizens
International Bank and ACB International Bank are rounding off merger
talks which have been on since the CBN made the directive
public.
An impeccable source from one
of the banks confirmed that they have all agreed to merge and are meeting
to finalise the arrangement. They have appointed top managers to represent
their interests in the group meetings.
It is not clear yet what the
owners of Devcom and Equitorial Trust Banks are thinking, but the talk in
the air is that the two, owned by telecommunications guru Mike Adenuga
Jnr., may pool resources under the name of Devcom.
NAL Bank is also leading
merger and acquisition negotiations with other banks, a decision which its
Managing Director and Chief Executive Ben Akabueze said is inevitable if
the bank is to be a player on the global financial market.
The banking industry is
expected to witness more mergers and acquisitions in the months ahead.
Just last week, Guaranty Trust Bank (GTB) acquired Inland Bank.
GTB is also holding talks with
Habib Bank, but it is not clear yet how far the discussions have
progressed.
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