One of Nigeria’s oldest and well-respected banks, Union Bank is set to be acquired by Titan Trust Bank, a two-year-old bank with a balance sheet far less than its target.

The acquisition is via an offer for sale that will see the majority owners of Union Bank Plc, divest their entire holdings said to be around 90% to Titan Trust Bank.

Nairametrics recently published an exclusive revealing the people behind Titan Trust Bank, their shareholders and related parties. In continuation of our deep dive into what is shaping up to be a landmark deal in 2021.

Total Balance Sheet size

Titan Bank N136.3 billion
Union Bank N2.19 trillion as of December 2020 and is currently N2.56 trillion based on its 9 months interim results.
Thus, Union Bank is 18.8x the size of Titan Bank.
Shareholders Fund

Titan Trust Bank – N32.9 billion
Union Bank – N264.6 billion
Union Bank is bigger by 8x when it comes to Net Assets.
Customer Deposits

There can’t be a bank without a customer deposit even if you are a two-year-old bank like Titan Bank.
Titan Trust Bank – N85.9 billion
Union Bank – N1.1 trillion as of December 2020 (N1.2 trillion as of September 2021).
Multiple – Union 12.8x larger than TTB when it comes to customer deposits
Loans and Advances

Titan Trust Bank – N38.9 billion
Union Bank – N692.8 billion (N809.1 billion as of September 2021)
Head Count

Titan Trust Bank – 110
Union Bank – 2,342
Bank Branches

Titan Trust Bank – 6 branches nationwide (4 in Lagos)
Union Bank – 293 branches nationwide
ATM Points

Titan Trust Bank – 12
Union Bank – 937 and counting
Key Factors

As expected, Union Bank is a much bigger bank having been in operation far longer than TTB. However, when it comes to the acquisition of a company, age or number of years of operation is not the most important factor.

Cash – How much money the backers of Titan Bank are able to put on the table for the acquisition of Union Bank will be one of the determining factors. It is most likely that this will be a 100% cash deal paid to the majority owners of Union Bank who are divesting.

Regulators – We do not envisage any regulatory issues with a transaction of this nature for a number of reasons. Firstly, that Titan Bank is a much smaller bank swallowing a much bigger bank will not be viewed as anti-competitive. Rather, it will be viewed as an opportunity to have another strong competitor come on the scene to take on the bigger tier 1&2 banks.

Staff – Mergers, acquisitions and takeovers are often viewed with skepticisms because of what they might mean for employees. However, because Titan Trust Bank is much smaller than Union Bank, we do not expect any mass layoffs or payouts. Most of the employees in Union Bank will be retained at least in the medium to long term.

Bailout – Regulators like CBN will always welcome new investors taking over a bank that wants to be sold by its core owners. This absolves the CBN of any need to fill in that gap should the challenges of the shareholders start to negatively impact on the bank’s progress towards restructuring.

Synergies – This acquisition will also provide cost synergies especially for the acquirer, TTB. By buying into a big and established bank like Union Bank, it will within a year achieve a huge status of being a tier 2 bank something that may have taken up to a decade to achieve if it were to recapitalize TTB with the same amount of share capital as Union Bank. It will also not need to start opening new branches, investing in untested technology, opening new ATMs etc.

Culled from Nairametrics

Fantastic!

I think Union did some streamlining in the last 5 years or more. So, laying off a lot of staff might not be on the table.

I remember the Pharaoh’s dream in the Bible where there were 7 sleek and fat cows grazing on the field.
Another 7 thin and ugly cows just came, stood beside and swallowed the 7 sleek and fat cows.

Another Daura cabal magic