FirstBank of Nigeria Plc, Nigeria’s leading banking institution, and Ecobank Transnational Incorporated (ETI), parent company of the Ecobank Group, the leading African regional banking group, have entered into discussions to create what will be one of the largest and most diversified pan-African banking institutions.

Subject to necessary corporate, shareholder, regulatory and statutory approvals, the combined group would have total assets of over US$5.5 billion and over 470 branches and offices in 13 West and Central African countries including Nigeria, a subsidiary in the United Kingdom and a representative office in South Africa.

Ecobank is the leading indigenous banking group in Africa with over 110 branches in 13 countries in West and Central Africa including Nigeria. Ecobank has considerable experience in managing banks across many countries, currencies, and regulatory environments. Ecobank also has two regional subsidiaries focussed on investment banking and shared services.

FirstBank, Nigeria’s oldest and biggest bank (pre-consolidation) is one of the country’s most stable and highly respected financial institutions. FirstBank has over 360 branches spread all over Nigeria, a subsidiary in the United Kingdom, a representative office in South Africa, as well as 10 subsidiaries and associate companies in Nigeria.

The combination of Ecobank and FirstBank will create a major pan-African financial institution with the resources to compete in an increasingly competitive African banking sector currently attracting the interest of not only major regional banks but also leading international banks. It will therefore produce an indisputable leader not just in Nigeria but across the African continent.

Ecobank and FirstBank both believe that the proposed combination will significantly enhance shareholder value by eliminating duplication and reducing operating costs through shared services. It is also anticipated that a combination of both institutions will have the resources to considerably grow revenues by expanding into new countries and market segments.

FirstBank and Ecobank are in discussions with a view to reaching an agreement on the proposed combination. The agreement will cover issues such as shareholding structure, strategy, integration, management, governance, valuation, due diligence, and such other steps or actions that may be necessary in realising the objectives of the parties.

Such discussions will also take into consideration the memorandum of understanding of Ecobank’s Nigerian subsidiary with two local banks, Chartered Bank (together with Regent Bank) subject to the approval of all parties involved.

To Chief Philip Asiodu, Chairman of the Ecobank Group, “this combination marks the second phase of the evolution of Ecobank into a leading pan-African bank. In the first phase, Ecobank ushered in the era of indigenous regional banking in Africa and has grown over the past few years into a US$2 billion banking group, with shareholders from over 15 countries in Africa and beyond. Our shareholders include Francophone, Anglophone and Lusophone nationals and institutions”.

According to Alhaji Umaru Mutallab, Chairman of FirstBank, “the combination with Ecobank gives added meaning to the concept of globalisation and Nigeria’s increasing integration into the global economy. By providing a platform that leverages FirstBank’s strong domestic competences and Ecobank’s unique and impressive transnational coverage, we are creating a sub-regional presence, with the financial wherewithal, the technological endowment, and the transaction know-how to intermediate the financing needs that will drive our continent’s economic development”.

To Arnold Ekpe, Chief Executive Officer of the Ecobank Group, Ecobank is a model of regional private sector integration and cooperation in Africa. “The proposed combination makes sense for our shareholders. It strengthens our leading position in the African banking industry.

“We believe that FirstBank shares Ecobank’s commitment to institution building and shareholder value creation. We chose to work with FirstBank after a very careful review by the board of directors of the opportunities arising from the on-going consolidation programme in Nigeria. The proposed combination creates opportunities for major cost reduction and revenue generation”.

J. M. Ajekigbe, FirstBank’s Managing Director & Chief Executive observes that “within the context of FirstBank’s strategic intent of providing consistent value-creating leadership in the Nigerian financial services industry, which has resulted in FirstBank being the most profitable bank in the country, and the related strategy of progressive internationalisation, this combination presents a unique opportunity for us to extend our strong retail banking capabilities, and expand our international reach. To this extent, it is a win-win proposition for FirstBank, Ecobank, their shareholders, employees, and customers. Together, we are better positioned to exploit the significant strengths of both institutions by building a truly regional financial powerhouse”.

Africa has recently witnessed a spate of consolidation in the financial services sector, spurred largely by globalisation and increasing competition. The proposed combination of FirstBank and Ecobank represents a landmark transaction. It will be the first major cross-border combination involving two major indigenous African banks.

The proposed combination is also ideally placed to exploit opportunities that may emerge from the on-going initiatives such as NEPAD, the African Union and the Blair Commission that seek to encourage and promote African integration and economic development. A truly indigenous pan-African banking group is set to emerge that will compete at the forefront of banking on the African continent.