Intercontinental, 3 Other Banks Sign MoU
Fortune approves another merger plan
By Ayodele Aminu
The Nigerian banking sector recorded another milestone yesterday when Intercontinental Bank Plc, Equity Bank of Nigeria Limited, Gateway Bank Plc and Global Bank Plc signed a Memorandum of Understanding (MOU) to kick-start their consolidation.
The board of directors of Fortune International Bank Plc has also approved a merger plan with core banking groups as a response to the on-going consolidation plan in the industry.
The four banks that signed the MoU would be joining the first amalgamated bank (Allstates Trust Bank, Gulf Bank, Hallmark Bank, Lion Bank and Universal Trust Bank) that signed theirs two weeks ago to formalize their merger.
Already, the newly consolidated banks as at August 2004 had pooled together shareholders' funds of about N20 billion and are targeting not less than N26 billion before the end of the year.
Vice Chairman/Chief Executive, Intercontinental Bank, Dr. Erastus Akingbola who was flanked by the Managing Directors and Chairmen of all the consolidating banks said the four financial institutions have agreed to shore up their shareholders' fund to over N40 billion before the end of next year.
Akingbola who addressed the press shortly after the MoU was signed said the board and directors of the respective banks have "now decided to pursue a merger into a single entity subject to obtaining all necessary approvals."
He said while waiting for the approvals, the group shall "continue to pursue the various business expansion plans that will ensure the realization of the full potentials of the envisaged new mega bank while perfecting the existing group synergy."
The Intercontinental bank boss listed three key issues clearly evident in their consolidation process to include the perfection of their various business expansion plans, perfection of the exiting synergy and realization of the full potentials of the emergent mega bank.
Noting that the banks had over the years operated as a group, complementing one another, he maintained that in the current financial year the respective banks have reinforced the group identity through a well co-ordinated three-pronged development plan which principally addresses branch network expansion, IT base expansion and capital base expansion.
The expansion and business growth plan he, explained, would address a significant growth in branch network of individual member of the group to cater for wider segments of the economy, while the second leg of the expansion would address the beefing up of IT framework for cutting edge service delivery.
While maintaining that the emerging bank envisage to become the largest on-line real time network at post consolidation, Akingbola disclosed that the third leg of the expansion programme would focus on substantially beefing up the capital of the emerging bank.
Describing the consolidation of the banks as "a family re-union," he said the group is not averse to admitting more banks.
"We envisaged a group profile aggregate that will place us in the leading position in the banking industry at the end of the consolidation programme," he added.
Speaking with THISDAY shortly after the briefing, the Managing Director of Gateway Bank Plc, Mr. Samuel Olatunji, said fusion of each member of the group would produce one of the strongest banks in the country.
"After the consolidation, we would have one of the strongest and most formidable management group. It would allow us streamline our operations and have enough capital base to do business within and outside the country," he added.
His counterpart at Global Bank, Mr. Yinka Obalade, said the consolidating banks do not anticipate any job cuts after the merger, adding that their current staff strength would not be even sufficient.
Managing Director, Equity Bank, Mr. Akin Ajayi, who described the fusion of the banks as a good development, noted that at the end of the on-going consolidation in the industry there would neither be "a super strong bank nor marginal bank. At the end of the day, it would be a group of banks that are fairly equal."
Meanwhile, Fortune International Bank has also directed its executive management to review urgently on-going discussions with five different core banking groups and advise accordingly to enable the board seek ratification of the shareholders.
The management of Fortune says it currently has a share capital base of N4.3 billion which is within the 15 topmost share capital base in the industry.
"We have remained focused on the issues that influence major economic decisions and activities with the intention of driving our competences towards helping to achieve them. As a matter of fact, the country needs robust banking platform which must be carefully aligned with the capacity of the entire economy", the bank's management said.
The bank further stated that the current demand by CBN on increase in share capital base merely calls for strategic initiatives, which if carefully thought out, and not treated in isolation with the current demands of the economy, will improve the level of activities available to the system.
This, it explained, will help the customers to leverage on the growth pattern to improve their individual economic activities, provided the impact assessment of such developments were diligently done.
The management had earlier noted that it is ready for the new phase of banking that will emerge from the on-going consolidation of the banking sector, as it will create huge advantage for its teeming customers to increase their capacity.
Going by the mergers and acquisition guidelines and incentives released by the apex bank a month ago, the emerging banks are expected to benefit from CBN's incentives for banks that achieve the minimum capital before the December 2005 deadline. Some of such incentives include authorisation to deal in foreign exchange, permission to take public sector deposits and recommendation to the fiscal authorities for the collection of public sector revenue, as well as prospects of managing part of Nigeria's external reserves, subject to prevailing guidelines.
|
