“Titan Trust–Union Bank Merger: Bold Deal, Regulatory Reckoning, and Lingering Investor Questions”

In 2022, Titan Trust Bank, backed by the TGI Group, stunned Nigeria’s financial market with its audacious acquisition of a 93.41 per cent stake in Union Bank of Nigeria. The deal, valued at about ₦191 billion (US$461 million), involved the purchase of more than 27 billion shares at ₦7 each.

To finance the transaction, Titan Trust secured a US$300 million facility from Afreximbank and raised an additional US$190 million in equity from its core shareholders, Magna International and Luxis International DMCC. With approvals from the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), the Nigerian Exchange Group (NGX), and the Federal Inland Revenue Service (FIRS), the takeover appeared seamless—at least on the surface.

But beneath the glossy headlines, a storm was brewing.

The Debt Dilemma

At the heart of the controversy lay a fundamental CBN principle: Nigerian banks cannot be acquired with borrowed money. Debt-funded takeovers, the regulator insists, do not qualify as Tier 1 capital and can weaken the capital adequacy of the acquiring bank, exposing depositors to systemic risk.

A special investigation panel set up by the new CBN leadership concluded that Titan Trust’s acquisition structure failed this test. Questions were also raised about the role of proxies allegedly linked to the former CBN Governor, Godwin Emefiele.

By January 2024, the CBN had dissolved the boards of Union Bank, Titan Trust, Keystone, and Polaris, appointing new management teams. The message was clear: flawed acquisitions would not be allowed to stand.

Merger in 2025: Resolution or New Controversy?

In 2025, the regulator approved a court-sanctioned merger that saw Titan Trust absorbed into Union Bank, leaving Union Bank as the surviving entity. On paper, this “reset” corrected a problematic structure and reinforced the rule that bank ownership must rest on unencumbered equity.

Yet, new questions emerged. Why were Titan Trust’s shareholders not given the option to inject fresh equity, repay the Afreximbank loan, and recapitalise both banks to meet the ₦200 billion capital requirement? Instead, they were sidelined, raising fears of legal battles and potential market instability.

A Marriage of Weak Balance Sheets

Financial analysts have also questioned the logic of the merger itself. Titan Trust was reportedly burdened with negative shareholders’ funds, while Union Bank had long battled capital adequacy challenges under regulatory forbearance.

“This looks less like a strategic consolidation and more like two troubled banks forced into a marriage,” said Celestine Ukpong, an economist and investor strategist based in Lagos. “Unless transparency is ensured in the recapitalisation process, this could further weaken investor confidence in Nigerian banking.”

Rumors of a forced reduction in Titan Trust investors’ stake to 40 per cent add another layer of uncertainty. Can shareholders be compelled to divest without consent? At what valuation would such a sell-down occur? These questions, still unanswered, fuel investor anxiety.

Transparency vs. Regulatory Overreach

Proshare’s Economic and Market Intelligence Unit (EMIU) has framed the saga as a test of regulatory credibility and investor protection. While acknowledging the CBN’s right to correct a flawed deal, it warns that the opacity surrounding the recapitalisation terms undermines confidence.

At present, neither the CBN nor Union Bank has disclosed the size of the fresh Tier 1 equity raised for the enlarged entity. Proshare has been unable to update its Recapitalisation Watch because of this missing information.

“The CBN must not only act with integrity but also be seen to act with integrity,” said financial law expert. “Opacity fuels speculation, and speculation is destabilising in a market already struggling with trust issues.”

Unanswered Questions That Could Shape the Future

The Titan Trust–Union Bank saga leaves critical issues unresolved:

1. Capital Adequacy — How much fresh equity has been injected, and does it meet prudential requirements?
2. Shareholder Rights — Why were Titan Trust investors excluded from recapitalisation options?
3. Forced Divestments — Can shareholders legally be compelled to sell down their stakes, and at what price?
4. Regulatory Neutrality — Is the CBN striking the right balance between oversight and overreach?
5. Investor Confidence — What message does this send to local and foreign investors about the safety of banking investments in Nigeria?

These questions go beyond a single transaction. They will influence how future bank consolidations are structured, how investors perceive regulatory fairness, and how Nigeria’s financial sector attracts long-term capital.

Reflections: A Defining Case Study

The Titan Trust–Union Bank case is now a landmark in Nigeria’s banking history. It underscores the regulator’s commitment to prudence while simultaneously exposing the risks of opaque intervention.

Was the merger a straightforward correction of a flawed acquisition, or has it created a precedent where ownership rights can be reshaped by fiat? Until full disclosure is made, Union Bank remains both a symbol of regulatory resolve and a flashpoint of investor uncertainty.

For Nigeria’s banking sector, the lessons are stark: capital must be genuine, shareholder rights must be respected, and regulatory oversight must be exercised with transparency. Anything less risks eroding confidence in a sector critical to the country’s economic stability.

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