Anxiety in Union Bank over job losses

By ADEBAYO OBAJEMU

There are strong indications of the likelihood of mass resignations at Union Bank of Nigeria Plc, following the bank’s acquisition by a much smaller Titan Trust Bank, a subsidiary of TGI group. Last Wednesday, the two- year-old Titan Trust Bank formalized the takeover of a century-old Union Bank in an off-market deal totalling N191 billions.

In the wake of this landmark acquisition of a majority stake of 89 percent in Union Bank by Titan Trust Bank Limited, there was a flurry of activity that upstaged the leadership structure of the bank. First there was appointment of Mr. Mudassir Amray as the Chief Executive Officer, and Mr. Farouk Mohammed Gumel as the Bank’s Chairman.

Earlier, the Board of Directors of Union Bank had notified the NGX of the retirement of Mr. Emeka Okonkwo as Chief Executive Officer, effective 2nd June 2022. According to the bank, Mr. Okonkwo was to assist the incoming CEO and core investor during the transition period.

Other directors that left along side Okonkwo were: Mrs. Beatrice Hamza Bassey, chair/non-executive director; Mrs. Obafunke Alade-Adeyefa, independent non-executive director; Mr. Richard Burrett, non-executive director; Mr. Ian Clyne, non-executive director; Mr. Kenroy Dowers, non-executive director; Mr. Paul Kokoricha, non-executive director; Mr. Taimoor Labib, non-executive director; Mr. Mark Patterson, non-executive director; and Mr. Emeka Ogbechie non-executive director.

Sources at the Union Bank informed Business Hallmark that there are apprehensions among staff concerning their future, as some of the members of staff are said to be considering tendering their letters of resignation, even though, the new owners of the bank have not formally shown any indications of possible mass sack of staff.

A male member of staff at Oba Akran branch informed Business Hallmark that the “mood here is despondency because it is still a shock to us how a small bank just two years old could acquire Union Bank. This speaks largely to the incompetence of the management structure dating back to Emeka Emuwa era as managing director. It is sure some of us will lose our jobs”.

Another member of staff at the head office in Marina who declined to disclose his identity said; “The whole deal that led to the acquisition is a fraud. Imagine all the assets of the bank, and all we keep hearing is acquisition at N191 billions. Surely something is fishy.”

Ndubuisi Ekekwe writing for Tekedia Mini MBA Class, said, that “What happened to Union Bank was not majorly because the bank was not performing well. Simply, even if the bank was performing at 4x its current numbers and its major shareholders decide to exit, they could have still gone ahead. Sure, great numbers would have made the acquisition very expensive, diminishing interests from bargain hunters.”

According to him, what happened is that “Union Bank has lost control of itself when it had more than 51% of its shares out there. That three of its shareholders banded together and sold to a 4th investor, giving it super-majority, is part of market systems. If you do not want that, never allow 51% to be floating as those external players can team together and change the equation.

“Union Bank’s only option was bidding higher than Titan Trust Bank on whatever those investors were asking for. In other words, Union Bank would be expected to buy itself back by paying investors who held its shares. Unfortunately for the bank, it does not have the funds to do that. After all, it sold part of itself to get money from those investors to start with!

“That those investors sold to Titan Trust Bank, and from rumors, at a great premium to what the bank was trading at the stock exchange, is actually a great confidence in the bank’s operations. This is not similar to what happened to Blockbuster and Nokia which faded due to massive disruptions from new innovators.

“This is simply that some investors wanted to exit because one of them needed money badly to pay down maturing debts, and they looked for someone with cash to bail them out.
“Of course, Union Bank could have avoided the acquisition but for those government bailouts from Central Bank of Nigeria and AMCON which forced the bank to raise capital, and in the process created the super-holders.

But that old Union Bank is different from the current one. The problem though is that the current leadership cannot change the structure because they do not have the funds. Of course, it was the bank that put itself into the old position to start it: creative destruction, people.
Many staffers spoken to by Business Hallmark agreed with the above analysis put forward by Ekekwe.

At the headquarters in Marina, two senior staffers who spoke to this medium on conditions of anonymity opined that they live in atmosphere of uncertainty, adding that some staff were advised to resign just like the former directors while others are resigning or mulling resigning out of fear of being sacked.

The palpable fear is that anything could happen should the new owner decide to downsize or close some branches of the bank spread across the length and breadth of the country, many of them are certain to lose their jobs.

However, the corporate affairs department has allayed fears of sack when Business Hallmark sought their reaction to apprehension on the part of staff of possible job losses.

Dr. Olufemi Omoyele director of Entrepreneurship at Redeemers University, says acquisitions in Nigeria often “leads to job losses but given the fact that Titan Trust Bank is a smaller bank, it is most unlikely job losses in this instance will be massive, if there’s any at all.”

Business Hallmark gathered that it is not only members of staff of the century-old bank that are aggrieved and disturbed by the acquisition, some minority shareholders believe there are more to the acquisition than meet the eyes. Some of them have reportedly expressed worry over the acquisition.

In his reaction sent to an online paper (not Business Hallmark), the founder of the Independent Shareholders Association, ISAN, Sir Sunny Nwosu said he expressed doubt about the true acquirers of the bank.

“Titan Bank is not even more than two years in Nigeria, they may not have the leverage to acquire a bank as big as Union Bank, I think there are forces behind the acquisition. I believe with time the real truth will unfold,” Nwosu said.

Ambrose Omokhordion, chief research officer at Investa, told Business Hallmark that “what is important is that the new owners and management should reposition the bank for greater efficiency. This bank is century-old but behaving like ten months old babe. Though many have said the true owners will surface, what is important is that the bank be run well.”

Meanwhile, last week, it was widely reported that African Export Import Bank (Afreximbank) has provided $300 million in financial support for the acquisition of Union Bank Nigeria (UBN) by Titan Trust Bank Limited, after the majority foreign investor, Atlas Mara, decided to quit the Nigerian market.

The loan, it was learnt was part of Afreximbank’s effort in enabling African investors control the financial market in the continent, a statement signed by Afreximbank’s media personnel, Amadou Sall, said.

Afreximbank didn’t state if the $300 million was disbursed as loan or in exchange of a stake in Union Bank, where Titan Trust Bank now owns 95.41% stake in. The deal is reportedly above N100 billion based on its market valuation.

Recall that Atlas Mara had began shopping for buyers of its stake in Union Bank as early as 2021, and Access Bank was at one point reportedly linked with a bid to acquire it.

However, the majority shareholder, alongside Union Global Partners Limited,, sold to Titan Trust Bank, which is a subsidiary of TGI Group.

In the statement released on Monday, Afreximbank said, “African Export Import Bank (Afreximbank) has announced the disbursement of a US$300 million Intra-African Investment Financing Facility to Titan Trust Bank (TTB) to support its acquisition of a majority stake in Union Bank Plc, Nigeria (UBN).”

“Afreximbank’s financial support enables TTB to secure the acquisition of a well-capitalised bank with an extensive network, enabling the entity to better serve vital economic activities of the public sector, companies, and small and medium-sized enterprises,” Sall said.