That marriage between Heritage, Enterprise banks
The Central Bank of Nigeria (CBN) granted final approval for the merger of Heritage Bank and Enterprise Bank. Furthermore, the Federal High Court sanctioned the scheme of merger and ordered the merger of both institutions. Our reporter examines the deal.
Enterprise Bank Limited was formed to assume the assets of the defunct Spring Bank Plc - a product of the merger of six banks during the 2006 consolidation exercise.
Recall Enterprise Bank Limited, was a product of the takeover of Spring Bank Plc by the Nigerian Deposit Insurance Corporation (NDIC) over insolvency issues in 2011. The NDIC would later sell the bridged bank to the Asset Management Corporation of Nigeria which acquired its bad debts and injected liquid capital into the ailing bank. Bank PHB and Afribank, which also suffered the same fate at the time would also become Keystone Bank and Mainstreet Bank respectively.
All three banks sold to AMCON and it appointed its own management and injected N680 billion into the banks, with the promise to sell the banks within three years. After about three years, AMCOM put the banks for sale.
On October 15, 2014 HBCL Investment Services Limited (HISL), the promoters of Heritage Bank who had bided N56 billion to acquire Enterprise Bank did emerge the preferred bidder.
In January 2015, AMCON formerly handed over Enterprise Bank to Heritage Bank at a ceremony at the InterContinental Hotel Lagos. Speaking at the Board Divestment Closure ceremony organized by AMCON, the Chairman, AMCON, Alhaji Kola Belgore, noted that the bridged banks had been restored to financial solvency.
The Managing Director, AMCON, Mr. Mustafa ChikeObi, had said the corporation’s divestment from the bridge banks was in line with the CBN’s regulation to leave banks in the hands of public hands.
On that day, the Managing Director, Heritage Bank, Mr. Ifie Sekibo, also said with the AMCON Divestment Closure signaling final disengagement of the corporation from Enterprise Bank, Heritage Bank promises to make the bank more successful.
“We will create more value and improve on what has been done at Enterprise Bank. One year from now, all stakeholders will see reasons to appreciate the sale of the bank to Heritage Bank,” Sekibo had said.
The outgoing Managing Director of Enterprise Bank, at the time, Mr. Ahmed Kuru, also expressed happiness over Heritage Bank’s emergence as the preferred bidder for the bridge bank, saying with Heritage Bank’s takeover of Enterprise Bank, “the level of damage will be minimized compared to if AMCON’s shares in the bank (Enterprise) had been acquired by a larger bank.”
But before the process could complete, a federal high court sitting in Lagos on July 27th 2015 ordered an Extra-ordinary General Meeting of all the parties to the deal. This was held on Wednesday, August 12th August, 2015, where the shareholders of the merging banks sealed the deal. Then the final approval by CBN came in last week.
“The management of the Central Bank of Nigeria (CBN) has approved the grant of Final Merger Approval to Heritage Banking Company Limited and Enterprise Bank Limited and the licence of Heritage Bank Limited (the successor),” the CBN said in a letter to Heritage Bank.
Industry experts have hailed the deal saying, it’s the entry of yet another big bank in Nigeria. David Akwu, a former banker and lecturer at University of Nigeria, Nsukka said the merger will instill more confidence in the Nigerian financial sector.
Commenting Mr. Manz Denga, a former Managing Director of Transnational Corporation (Transcorp) and former regional managing director of UBA, East Africa, said “what has happened is a key step in completing the earlier merger of the two banks, Heritage, a regional bank and Enterprise, a regulator managed national bank. My personal opinion is that it is good for the industry, which is in need of more regional and national money banks.”
Mr Denga, who is currently the chairman of AfriBusiness ExpertEase (AfBEE) in Johannesburg, South Africa, however noted that “a key success factor would be in savvy technology products that add value to customers on their systems, and not necessarily from brick and mortar branches. Risk and Corporate Governance would decide their fate and indeed that of all the players in Nigeria’s banking industry. The market is the final judge of the story whether successful or not”, he concluded.
After investing N56 billion to acquire Enterprise Bank Limited, Heritage Bank Company Limited has automatically transferred from a regional bank to a national bank. It has also moved from a tier two bank to a tier one bank.
Heritage Bank, is expected to increase its presence to about 200 branches boosted by about 165 branches across the country of the acquired bank.
Reacting on the merger, the “Managing Director/Chief Executive, Heritage Bank, Mr. Ifie Sekibo, said “We’re pleased with the final approval of the merger of the two institutions. The stage is now set for us to achieve the vision of a bigger and better bank that offers world class banking services designed to help customers to create, preserve and transfer wealth.”
Sekibo added that “With this acquisition, the new Heritage Bank is better positioned to offer unparalleled banking services which spread across over 200 branches, 177 ATMs, 57 Cash Centres and 2000 POS Terminals in 26 states. We shall harness the better of the two worlds combined in terms of our innovative products, bespoke technology and extended branch network manned by a team of tenacious people; as this automatically transforms our bank from a tier-2 player to a strong tier-1 player that is One! Bigger! Better!,”.
“As we integrate into a larger bank, we assure our esteemed customers that this strategic stride is ultimately to serve them better. We affirm our commitment to all stakeholders that we will continue to deliver on our promise of creating and preserving wealth across generations through highly personalised service.”
He noted that as a brand built on a legacy of innovation, Heritage Bank recently achieved a milestone with the ISO/IEC 27001:2013 certification award in recognition of its commitment to effective and secured financial system. The bank has also set a record as the only bank in Nigeria to get this certification award in less than three years of operation. It has, by this certification, joined the league of big players already certified in the industry, including the CBN.