By YINKA KOLAWOLE, with agency report
In line with ongoing reforms in the mortgage sector which pegged minimum capital requirement for state operations at N2.5 billion, Spring Mortgage Plc and United Mortgage Limited have concluded agreements to merge.

The merger deal was disclosed at a court-ordered meeting with stakeholders held in Lagos recently. Managing Director/CEO, United Mortgage, Mr. Walter Akpani, remarked at the meeting that the merger will enable both firms to meet the stipulated capital requirement by the Central Bank of Nigeria (CBN). The two firms had on April 24, 2014, signed a Memorandum of Understanding in relation to the merger scheme.

The scheme which had been cleared by the Approval-In-Principle received from the SEC was presented for consideration and approval of shareholders at the Court-Ordered Meeting on May 21, 2015. Shareholders of both companies voted to support to support the merger. The new entity, after regulatory approvals of the CBN and the Securities Exchange Commission (SEC) will be renamed United Mortgage Bank Plc and would result in merging of both business into one.

Akpani noted that the merger would also lead to creating a bigger firm that will be able to compete effectively within the mortgage industry, improve operational efficiencies as a result of cost savings and improve capital base among other reasons. “The merger will provide a strong financial muscle to the post-merger United Mortgage in executing bigger mandates. It is worth mentioning that United Mortgage currently owns 47.87 per cent in Spring Mortgage Plc. It is against this background that the proposed merger is conceived, with the aim of consolidating the mortgage business of both firms. The Directors of both companies are of the opinion that this merger will improve the business of the post-merger United Mortgage and create additional value for the shareholders of the post-merger bank. The Scheme is set to be achieved by the transfer of the assets, liabilities and undertakings of Spring Mortgage to United Mortgage, in exchange for which ordinary shares of United Mortgage will be issued to the other shareholders of Spring Mortgage in the agreed manner,” he stated

It would be recalled that the CBN had in a circular stated that 10 primary mortgage banks (PMBs) had met the N5 billion requirement to operate as national mortgage banks while 26 met the N2.5 billion mark for state mortgage banks. The apex however noted that four out of the 26 PMBs had properties held for sale, which they were yet to fully dispose off or create mortgages for. It further disclosed that about four PMBs were still in different stages of merger arrangements.