Boards approve First Bank, Ecobank merger

The merger talks between First Bank of Nigeria and Ecobank Transnational International have finally been approved by the boards of the two banks.

The two banks had earlier suspended talks and it appeared the merger plan had flopped.

The Managing Director, First Bank, Mr. Jacobs Ajekigbe, confirmed the development at the bank’s 38th annual general meeting in Abuja on Thursday.

He said the merger would create the largest bank in West Africa.

ETI Chairman, Mr. Mande Sidibe, had at the bank’s annual general meeting in Cotonou , Benin Republic, earlier in the year, said that the talks between the two banks had failed.

Sidibe had told shareholders that the 18 months merger discussions failed because both parties acknowledged that the business combination would be very difficult to manage.

He had said the plan to discontinue with the merger talks was a consensus agreement by both banks.

“We are discussing with other banks and latest developments would be reported to shareholders in due course,” he had said.

ETI later entered into another merger talks with Unity Bank Group, an exercise said to have put the final lid on the arrangement with First Bank.

However, the merger arrangement with Unity Bank was rejected by the bank’s shareholders at the Ecobank’s last annual general meeting.

The first market induced merger after the first phase of the consolidation programme was the IBTC/Stanbic Bank merger.

Ajekigbe said the merger would create the largest bank in West Africa. They had adopted the name FirstEcobank for the two entity.

The First Bank’s managing director also confirmed that investors ‘heavily’ oversubscribed the company’s recent public offer and disclosed that it would be able to absorb only about N150bn.

The company was in the capital market recently to raise about N100bn to raise its shareholders’ fund. There had been speculations that investors staked between N300bn and N500bn during the pubic offer.

He also raised the hope of shareholders that the company would be able to realise some of the $100m it gave as loan to the ill-fated Investors International of London Limited.

IILL had in 2002 borrowed $100m from First Bank in its bid to acquire 51 per cent stake in the Nigerian Telecommunications Limited. It could not make the full payment and was forced to forfeit the deposit it had paid the Federal Government.

Ajeikigbe said the recovery of the loan would increase the profitability of the bank in the future accounting year.

He also disclosed that the bank had accumulated N7.2bn for equity investment in small and medium enterprises, while the bank’s branch network had been raised to 408.

The First Bank Group reported gross earning of N90.32bn while the bank reported a gross earning of N79.29bn. The 2006 results put the group’s earning at N67.44bn and the bank’s gross earning at N61.24bn.

The group’s profit before tax rose from N21.83bn in 2006 to N25.56bn in 2007 while the bank’s profit before tax rose from N19.83bn to 22.09bn within the same period.

The profit after tax rose N17.38bn in 2006 to N20.36bn in 2007 for the group while the bank’s profit after tax rose from N16.05bn in 2006 to N18.36bn in 2007.