The African Export-Import Bank (Afreximbank) has given a $40 million Intra-African Investment facility to Fidelity Bank Nigeria Plc to support its purchase and recapitalization of Union Bank UK.
Fidelity Bank is a commercial bank in Nigeria headquartered in Victoria Island, Lagos. It has 250 branches and holds an international banking permit but has never operated outside its base in Nigeria.
Fidelity Bank and Union Bank entered a binding agreement for the acquisition of a 100 per cent equity stake in Union Bank UK plc in August 2022. By 2023, Fidelity received approval from the Bank of England’s Prudential Regulatory Authority for the control change of Union Bank UK Plc. The Central Bank of Nigeria had also approved the transaction, issuing a letter of “No Objection.”
To actualise the acquisition, Afreximbank financially supported the Nigerian lender.
This landmark deal marks a significant moment as an African bank acquires a European lender, highlighting the growing global influence of African financial institutions.
Kanayo Awani, Executive Vice President at Afreximbank, highlighted that this investment supports African ownership of capital and boosts trade within the continent.
“Fidelity Bank’s acquisition of Union Bank UK is a significant milestone, reinforcing African control in global finance. We are not only strengthening Nigeria’s banking sector but also promoting financial integration between Africa and its diaspora. This aligns with our mission to enhance trade and economic stability in line with Agenda 2063 for a prosperous Africa,” Awani said.
The funding, given in two instalments of $20 million each, enabled Fidelity Bank to buy a 100% equity stake in Union Bank UK and inject additional capital as approved by the UK regulator.
This facility helps Fidelity Bank extend its services to the UK, targeting Africans and African-owned businesses, and supporting diaspora investments.
Nneka Onyeali-Ikpe, Fidelity Bank’s CEO, expressed gratitude for Afreximbank’s support. “We are very thankful to Afreximbank for supporting our international growth initiatives. This partnership has produced a positive outcome. The refinancing of the Union Bank UK acquisition will create a stronger service franchise to support trade and diaspora banking.”
How Fidelity Bank’s acquisition will impact the economy
Fidelity Bank’s acquisition is expected to boost Africa’s economic growth by increasing trade finance between Nigeria and the UK.
It will also help integrate the African Diaspora into regional supply chains and enhance the export capabilities of small and medium-sized businesses across the continent.
“The acquisition of UBUK is in furtherance of Fidelity Bank’s strategic initiatives on international expansion,” Fidelity Bank stated in a past press release dated September 13, 2023. “The board of directors of the bank is confident that the 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.”
Moreover, this transaction sets the bank on a path to achieve tier-1 status by 2025, aiming to join Nigeria’s five biggest banks by assets.
“While these are early days, we are happy to report that we are on track to meet our tier-one ambition as reflected in our financial results showing significant growth,” Fidelity Bank’s chief, Nneka Onyeali-Ikpe said in 2022.
“The diverse service bouquet and business model of Union Bank UK offered a compelling synergy, and we hope to build on the existing capacity to create a scalable and more sustaining service franchise that will support the wider ecosystem of our trade businesses and diaspora banking services,” he added.
This acquisition is a major step for Fidelity Bank, opening new opportunities for growth and positioning it as a key player in both African and global banking.
