Fidelity Bank Finally Takes Over Distressed Union Bank UK

Fidelity Bank Plc has announced the completion of the acquisition of a 100% stake in Union Bank Plc UK, according to a press release it sent to the Nigeria Exchange Limited (NGX).

The deal follows the bank’s outstanding performance in 2022, which saw its earning assets grow significantly to N2.64 trillion, even as financial books show that Union Bank UK has been distressed for many years.

Fidelity Bank said that the acquisition is aimed at strengthening its “strategic initiatives on international expansion.”

“Further to the press release dated August 2, 2022, wherein Fidelity Bank Plc (the Bank) notified the General Public of its proposed 100% acquisition of Union Bank UK PIC (UBUK), the Bank is pleased to announce the completion of the transaction and receipt of the approval of the Bank of England’s Prudential Regulatory Authority (PRA) for change of control of UBUK.

“The acquisition of UBUK is in furtherance of Fidelity Bank Plc’s strategic initiatives on international expansion. The Central Bank of Nigeria had earlier issued a letter of “No Objection” to the transaction.

“The Board of Directors of the Bank is confident that acquisition will unlock significant value for the Fidelity Bank Group and is taking action to ensure the seamless integration of the operations of both entities,” the bank said in the press statement.

The acquisition required approval from the Prudential Regulatory Authority of the United Kingdom.

Fidelity Bank stated that this move aligns with its strategy of expanding beyond the Nigerian market, allowing it to better serve its growing client base.

Meanwhile, checks by BUSINESS METRICS reveal that Union Bank UK Plc is stressed as recent performance numbers posted by the subsidiary degenerate.

According to its audited full year financial statement ended December 31, 2022, the bank asset declined significantly to $96.63 million from $170.9 million in 2021, $278.62 million in 2020 and $454.8 million in 2019.

Further probe shows that after posting a paltry $702, thousand profit after tax (PAT) in 2018, the financial institution has closed each year on negative returns up to 2022.

Specifically, Union Bank UK slipped into annual negative return in 2019 with $11.66 million loss, while its woe deepened in 2020 with $16.51 million loss after tax.

Although, the lender succeeded in slashing its annual losses to $5.97 million in 2021, it remained in the red territory with $5.38 million loss to close the year 2022.

Income is another performance index that shows the bank was losing grip on the market and was indeed in dire need of lift which experts expect fidelity bank to provide.

Its total income embarked on sharp decline since 2020, settling at $6.27 million from $14.63 million in 2019. The trend continued in 2021 and 2022 as its income remained low at $3.95 million and $3.99 million respectively.

Investment experts said the task is now on Fidelity Bank to identify and leverage on the strength of Union Bank UK to return it as its new subsidiary to profitability and stability.

The acquisition by Fidelity Bank follows the similar moves by Access Bank Plc, which earlier this year, entered into agreements for the acquisition of Standard Chartered’s shareholding in its subsidiaries in Angola, Cameroon, The Gambia, and Sierra Leone, and its consumer, private and business banking business in Tanzania.

Fidelity Bank Finally Takes Over Distressed Union Bank UK