Emefiele Investigation: Union Bank, Titan Trust Bank acquisition face uncertain Future
Union Bank of Nigeria Plc and Titan Trust Bank (TTB), face an uncertain future following the latest special investigation report on the activities of the central bank under Godwin Emefiele.
Union Bank, which recently announced its delisting from the Nigerian Stock Exchange (NGX) after 52 years, is now embroiled in a controversy stemming from a leaked ‘CBN Special Investigation Report’ involving its acquisition by Titan Trust Bank Limited (TTB).
This situation poses a complex challenge for the bank, particularly regarding its substantial customer deposits.
The leaked report, which alleges irregularities in the acquisition process of Union Bank by TTB, has raised concerns among Union Bank’s stakeholders, especially its customers.
- Union Bank, holding over N1.6 trillion in customer deposits, faces a potential crisis of confidence as the controversy continues to unfold. Titan Trust Bank reported a depositors funds of about N182 billion as of December 2021.
- The bank’s management and Titan Trust Bank have been quick to respond, aiming to reassure customers and the public of the legality and transparency of the acquisition process.
However, the ongoing uncertainty and the possibility of further developments could impact customer perceptions and the bank’s financial stability.
Implications for Bank Depositors
The unfolding controversy and the potential merger between Titan Trust Bank and Union Bank present significant implications for the depositors of both banks.
- For Union Bank customers, the allegations and the impending delisting raise concerns about the stability and future of their deposits, which total over N1.6 trillion.
- While Titan Trust Bank has sought to reassure stakeholders of the legitimacy and transparency of the acquisition, depositors may still feel uncertain about the security and accessibility of their funds.
- Similarly, Titan Trust Bank’s depositors might be wary about how the merger and the ongoing controversy could affect the bank’s financial health and their deposits.
The situation demands clear communication and robust measures from both banks to maintain depositor confidence, as any perceived instability could lead to a decline in customer trust and potentially trigger the withdrawal of deposits.
Risk to Interbank Activities
The controversy surrounding Titan Trust Bank and Union Bank also poses risks to their interbank activities, such as the clearing of funds and other collaborative financial operations.
- Other banks might exercise increased caution in their dealings with these two institutions, given the potential legal and reputational risks involved.
- This heightened scrutiny could affect the efficiency of interbank transactions, including lending, borrowing, and clearing services.
- In the banking sector, where trust and stability are paramount, any uncertainty or perceived risk can lead to a cautious approach among peer institutions, potentially impacting the operational fluidity and financial standing of the banks involved in the controversy.
Planned Merger and Regulatory Approvals
The planned merger between Titan Trust Bank and Union Bank hinges significantly on regulatory approvals, which could be influenced by the current situation.
- If the Nigerian government decides to pursue legal action based on the allegations in the leaked report, the Securities and Exchange Commission (SEC), alongside other regulatory bodies, might exercise caution before approving the merger.
- The SEC’s decision will likely consider the legal proceedings and the need to protect shareholder interests and market integrity.
- In such a scenario, the approval process could face delays, or additional conditions might be imposed to ensure that the merger aligns with regulatory standards and market fairness.
Delisting from the NGX
Adding to the bank’s challenges is its recent decision to delist from the Nigerian Stock Exchange, a significant move after a 52-year presence.
- In a corporate filing obtained from the NGX website by Nairametrics, Union Bank announced that it had applied to the NGX for approval to delist and is considering a payout of N7.70 per share to its shareholders in its scheme of consideration.
- This decision marks a new chapter for the bank, transitioning from a publicly traded entity to a private one. However, this controversy may well throw a spanner to its plans if it affects the decision of the NGX or SEC to approve it.
- The delisting process, coupled with the current controversy, could influence investor sentiment and the broader market’s view of the bank. Following the bank’s last press release
Who owns Titan Bank? According to the information contained in the 2021 annual report of Titan Bank, the majority shareholders are Aminu Yaro, Luxis International DMCC, and Magna International DMCC with 9.07%, 48.09%, and 37.39% respectively.
