Union Bank Seeks New Core Investor as TitanTrust Merger Closes, but Faces Tough Recapitalization Race Against Peers

Union Bank of Nigeria Plc is preparing to seek a new core investor following the completion of its long-awaited merger with TitanTrust Bank Limited.

According to multiple sources who spoke to Nairametrics, the move is part of a broader effort to reposition the century-old lender after a turbulent two years under the control of the Central Bank of Nigeria (CBN).

The bank confirmed in a statement that it had secured final regulatory approval from the apex bank, officially completing the merger that integrates TitanTrust into Union Bank’s operations.

The merger, which had been in the works since 2022, was delayed by governance and ownership challenges that eventually drew in the CBN.

Regulatory takeover reshapes the deal

Union Bank and TitanTrust were both placed under CBN control in 2023 after questions were raised about ownership structures and regulatory compliance.

The intervention cleared the path for a regulatory-driven merger, effectively resetting the bank’s shareholder base.

Nairametrics also reports that Tropical General Investments (TGI) Group, the original shareholder of TitanTrust Bank, is not part of the newly merged entity following the regulatory takeover. This marks a major shift in the ownership structure and underscores the CBN’s influence in shaping the outcome of the deal.

The absence of TGI means that Union Bank must now seek a credible core investor to provide long-term stability, strategic direction, and capital support. Insiders note that discussions with potential investors are already underway.

Search for capital amid recapitalization push

The hunt for a new investor comes against the backdrop of the CBN’s recapitalization directive, which requires banks to shore up their capital bases within 24 months.

The target for the industry is estimated at about N4.1 trillion, and so far, banks have raised around N2.8 trillion, leaving a gap of more than N1.3 trillion with just six months left to the deadline.

Union Bank’s quest for a core investor is therefore not just about replacing old shareholders — it is also about survival and competitiveness in an increasingly consolidated industry. Analysts have noted that only banks with deep-pocketed investors and strong governance will emerge stronger after the recapitalization exercise.

Union Bank’s uphill task

Founded in 1917, Union Bank remains one of Nigeria’s oldest financial institutions, with over a century of service to individuals, corporates, and government entities.

However, in recent decades, it has faced recurring challenges: declining market share, ownership tussles, and stiff competition from newer, more agile rivals.

TitanTrust Bank, by contrast, was one of Nigeria’s youngest lenders, having obtained its banking license in 2019. Backed initially by TGI Group, it made a bold move in 2021 to acquire a majority stake in Union Bank, a transaction that surprised many industry watchers given its relatively small size.

But the acquisition quickly ran into regulatory headwinds, setting the stage for the CBN’s intervention in 2023 and eventually leading to the just-concluded merger.

Contrasts with peers: Zenith, Access, and UBA chart different paths

While Union Bank is still searching for a new anchor investor, peers such as Zenith Bank, Access Holdings, and United Bank for Africa (UBA) are already far ahead in their recapitalization plans, each employing distinct strategies that highlight Union Bank’s precarious position.

• Zenith Bank, long regarded as one of Nigeria’s most profitable lenders, has leaned on its strong balance sheet and robust earnings to execute an aggressive rights issue and private placements, ensuring it stays well-capitalized ahead of the deadline. Its dominance in profitability and investor confidence has allowed it to take a position of strength.
• Access Holdings, on the other hand, has pursued a multi-pronged strategy, combining equity raises with plans to attract foreign investors as part of its broader expansion across Africa. For Access, recapitalization is not only a regulatory compliance issue but also a strategic lever for continental growth, consolidating its footprint in multiple African markets.
• UBA has adopted yet another approach, leveraging its reputation as a pan-African banking giant with operations in more than 20 countries. It has focused on a rights issue to tap into existing shareholder loyalty while also leaning on its diversified earnings across Africa to assure investors of long-term stability. This measured but confident strategy reflects UBA’s ability to raise funds internally and externally, without the governance uncertainties currently dogging Union Bank.

Compared with these peers, Union Bank faces a dual challenge: it is not only racing to meet regulatory capital requirements but also trying to restore credibility after years of turbulence. Where Zenith and Access are leveraging strong earnings and expansion, and UBA is tapping continental scale and shareholder trust, Union Bank seems to be in survival mode, betting on the appeal of its wide branch network and legacy customer base to attract a new core backer.

Why this matters

The significance of Union Bank’s next steps cannot be overstated. Without a core investor, the bank risks being left behind in a market where its peers are aggressively raising capital through rights issues, public offers, and private placements.

A credible investor could help:

• Inject fresh capital to meet recapitalization requirements,
• restore confidence among depositors and shareholders,
• provide strategic expertise in digital banking and risk management,
• position the bank for growth in an increasingly competitive financial system.

Financial experts note that Union Bank’s wide branch network and legacy customer base remain valuable assets. These strengths could appeal to both domestic institutional investors and foreign banking groups seeking to expand their footprint in Africa’s largest economy.

State of Banking Recapitalization

The merger and investor search come at a time of intense activity in Nigeria’s banking sector.

While Access Holdings, Zenith Bank, and GTCO are completing their capital raise, UBA and FirstBank are all in various stages of recapitalization, with some already raising billions through rights issues and private placements.

Mid-tier banks such as Fidelity, FCMB, and Stanbic IBTC are also pursuing aggressive capital-raising strategies. So far, the industry has collectively raised about N2.8 trillion, largely through equity and debt issuances. With six months remaining before the deadline, the race is on to cover the remaining N1.3 trillion shortfall.

Union Bank has yet to announce the structure of its investor search, whether it will prioritize domestic institutional investors, foreign banking groups, or private equity firms.

Analysts believe that Union Bank’s ability to attract a strong core investor will not only determine its place in this new era of Nigerian banking but could also send signals about investor confidence in the wider financial system.