15 November 2005

Nigeria: Merger: NUB Shuns North Omega Bank Group

The management of NUB Bank, plc. has opted out of the proposed merger between the First North Group comprising NUB, Bank of the North (BON), and New Africa bank and Bank One Group comprising Omega Bank, Trans-International Bank, and Fountain Trust Bank to form the North Omega Bank.

With this development NUB appears to be standing alone in the attempt to recapitalise as the two other banks in its group, namely, BON and New Africa Bank, have confirmed their merger agreement with the Bank One Group to form the North Omega Bank.

NUB has denied any involvement in the recent merger deal between the First North Group and Bank One Group, saying that it is not part of the reported merger as it had hitherto entered a similar arrangement with the Bank of the North and New Africa Bank.

The denial followed the reported consummation of a merger by the two groups over the weekend to form the North Omega Group in the effort to meet with the Central Bank of Nigeria's (CBN) N25 billion recapitalisation for banks operating in Nigeria.

Apart from denying any involvement in the recent deal however NUB, which is a major stakeholder in the First North Group, referred to the earlier memorandum of understanding (MOU) it signed with two other banks, and insisted that it has thus far only been involved in a merger with Bank of the North and New Africa Bank.

The head of corporate affairs of NUB, Mr. Aliu Akosi-le, who spoke with Daily Trust, said that NUB had long fused with Bank of the North and New Africa Bank and was working towards making the alliance work since the NUB has emerged as the core investor in the First North Group.

He said though the MD and chief executive of BON was reported to have dropped his resignation, but that the action would not affect the merger which has long been wrapped up by the three merging banks.

Officials of the Bank of the North have confirmed their involvement in the new merger with the Bank One Group, a development which, if upheld, may suggest a pull out from its initial agreement of merger with the NUB.

BON's principal manager for public relations, Alhaji Mohammed Bafa-bura, told Daily Trust in a telephone chat that there was nothing altogether new in the merger with the Bank One Group as the talks have been going on for quite some time.

Daily Trust findings however revealed that the position taken by the two banks may not be totally divorced from insinuations of an attempt to short-change the other partners in the First North Group by imposing NUB as the groups' core investor, which led to the resignation of the BON managing director last week.

The management of the Bank of the North, according to our sources, might have decided to locate new partners in the bid to survive the consolidation exercise when they discovered that they would not be allowed to decide the terms of their merger on their own, but were directed to accept NUB as core investor by the regula-tory authorities.

The North Omega Bank, if it pulls through, is expected to pool over N30 billion and could emerge as a bank with vast linkages in all the geo-political zones of the country.

Meanwhile a statement by the head of corporate affairs of NUB made available to Daily Trust yesterday said that the as core investor of the First North Bank, plc. merger group it "reaffirms the unwavering commitment of the merging banks to forge ahead with a view to achieving its consolidation plan by the November 2005 deadline."

The statement said that the group, which recently secured the pre-merger consent of the Central Bank of Nigeria (CBN) and the pre-merger approval of the Securities and Exchange Commission (SEC), is com-posed of NUB International Bank Limited, Bank of the North Limited, and New Africa Bank, plc. And has a combined shareholders' fund of about N21.0 billion.

The statement further disclosed that the First North Bank Group's consolidation process "is fully on course, having recorded a significant mileage that would enable it to meet and even surpass the N25 billion minimum capital requirement for the banking industry."

It added that the group, in line with a recent directive from the CBN and the Nigeria Deposit Insurance Corpora-tion (NDIC), is already working with a consortium of reputable consultants for the conduct of the requisite due diligence and valuation oversight that would fast-track the merger.

Copyright © 2005 Daily Trust. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.