LAGOS — In what may be regarded as the stealth deal of the year, Sterling Bank said, yesterday, it had signed a Transaction Implementation Agreement, TIA, with Equitorial Trust Bank to acquire the intervened financial institution.
The deal talks, which would be the fifth to reach an advanced stage in recent weeks among the rescued banks, after Finbank, Intercontinental Bank, Oceanic Bank and Union Bank signed similar agreements with potential buyers, has already won the backing of the ETB board and Chief Mike Adenuga, the billionaire founder of the bank. Reports also indicated that the Asset Management Company of Nigeria, AMCON and Central Bank of Nigeria, CBN were privy to the negotiations.
Until recently, Sterling Bank was considered an attractive front-row partner for foreign financial institutions looking to leapfrog an entry into Africa’s fastest growing financial services market. The latest announcement would mark an end to speculation on the bank’s varied strategic growth options as it finally opts for domestic consolidation over foreign dominance.
Since the CBN’s intervention, the future of ETB, long considered unique because of its binding relationships with businesses linked to its major shareholder in the mobile telephony, real estate and telecoms sectors, has been less obvious.
While a few other rescued banks had significant majority shareholders none had such a close dependence on trading entities connected to a single shareholder for customer volume. This has made the ETB founder’s buy-in to any deal vital for potential acquirers.
According to an informed source close to the talks, ‘the Sterling Bank-ETB talks are being driven by clear strategic considerations on the post-deal benefits for both sides, in contrast what we have seen in some other discussions, where one party in negotiations seems to have been the involuntary acquiescent partner. The urgency introduced by the NDIC’s takeover of three institutions aside, this is a very well thought out deal that would yield impressive returns on equity for years to come.’
While the financial terms of the deal are yet to be disclosed, analysts expect that the TIA will move to a substantive agreement without the distractions of litigations filed by minority shareholder. ETB is privately held and is not listed on the Nigerian Stock Exchange. For Sterling Bank’s shareholders, it is widely expected that they would welcome the deal as an historic opportunity to substantially scale up its assets and operations, in addition to benefitting from the cost savings to be derived from the merger’s synergies.
One institutional shareholder who spoke on condition of anonymity said that ‘naturally, we are surprised at the news and pleasantly too. ETB enjoys excellent custom from key players in telecoms and petroleum marketing and they are bringing this to the table, which is good. Without doubt, the deal would be a very positive one for the Nigerian banking sector.’
The combination of both financial institutions, which are matched in many ways, would create an institution with over N360 billion in customer deposits, N550 billion in assets and more than 185 operational branches across Nigeria.