Analysts: Titan Trust, Union Bank Merger Reinforces Confidence in Regulatory Oversight

The Central Bank of Nigeria’s decision to revisit and eventually restructure the Union Bank and Titan Trust Bank transaction is being described by analysts as a watershed moment in banking regulation, one that reaffirms the importance of equity-based ownership and long-term stability in the financial system.

In 2022, Titan Trust, backed by the TGI Group, startled the market when it acquired 93.41 per cent of Union Bank in a deal valued at about N191 billion ($461 million). The acquisition, funded through a $300 million Afreximbank facility alongside equity commitments of about US$190 million from Magna International and Luxis International DMCC, was initially celebrated as a landmark consolidation in Nigeria’s banking sector. Approvals were duly obtained from the CBN, the Securities and Exchange Commission, the Nigerian Exchange, and the tax authorities, while certificates of capital importation were issued to confirm the inflows.

Yet questions persisted over its structure. Analysts noted that although the deal followed regulatory procedures, the funding model appeared to conflict with the CBN’s long-established rule that Tier 1 capital must be fully equity, not debt. The regulator has long argued that allowing debt-funded acquisitions could expose depositors, weaken the acquirer’s balance sheet, and erode systemic confidence.

These concerns gained traction under a new CBN leadership. A special review panel found the Titan Trust model inconsistent with prudential standards, and by January 2024, the boards of Union Bank, Titan Trust, Keystone, and Polaris were dissolved, with new management appointed to stabilise the institutions.

By 2025, a court-approved merger concluded with Union Bank as the surviving entity, absorbing Titan Trust. For the CBN, this was more than a technical correction; it was a clear statement that ownership of Nigerian banks must rest on unencumbered equity, not borrowed money.

Analysts believe the outcome reflects more than just regulatory intervention. While details of recapitalisation and the position of original shareholders remain opaque, the consensus is that the process has reinforced confidence in the regulator’s neutrality and its broader mandate to protect the system. Market participants now recognise that adherence to transparent rules of ownership is central to sustaining confidence in the banking sector.

Proshare’s Economic and Market Intelligence Unit (EMIU) noted this in its latest report: “EMIU contends that what began as a bold acquisition has now become a test case of regulatory authority, governance, and the protection of investor rights in Nigeria’s banking sector. Until the loose ends are tied together, the lingering question remains. Was this a straightforward correction of a flawed deal, or has it created a precedent where ownership rights can be reshaped by regulatory intervention?”

Proshare’s analysts added: “The CBN was right to revisit the Titan Trust Bank and Union Bank business combination. The restructure of the recapitalisation was clearly based on a medium to long-term debt structure that did not qualify as Tier 1 bank equity finance. The previous CBN administration was remiss in this regard. However, the new CBN administration would be deemed guilty of playing coy, keeping the exact details of the present recapitalisation wrapped in obscurity. No one outside the regulatory institutions and the two banks involved in the revised business combination has an inkling of the fresh capital raise of the enlarged Union Bank or the terms of the merger.”

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