Photograph — Ventures Africa

Fidelity Bank Plc, a leading commercial bank in Nigeria, has announced its expansion into Europe with the proposed 100 per cent acquisition of Union Bank United Kingdom (UBUK) Plc. According to a statement by Nneka Onyeali-Ikpe, CEO of Fidelity Bank, the bank recently executed a binding agreement to acquire a 100.0 per cent equity stake in UBUK Plc in line with its strategic objectives and business expansion plan. “Union Bank UK offers a compelling synergy we hope to build on, to create a scalable and more sustaining service franchise that will support the wider ecosystem of our trade businesses and diaspora banking services,” said Onyeali-Ikpe.  

 Nneka Onyeali-Ikpe, CEO of Fidelity Bank.
Nneka Onyeali-Ikpe, CEO of Fidelity Bank.

The latest deal reflects its economies of scale and strategic entry into the European market for the first time. According to sources, when the deal is concluded with the UK regulatory authorities, it would be renamed accordingly. 

The commercial bank had recently made its way to play alongside the big FUGAZ banks- making it Nigeria’s 6th tier-1 bank. The news came after Proshare, in its credit rating for Nigerian banks, upgraded its rating for Financial Year 2021. The newly proposed acquisition reverberates the bank’s quest to go beyond its local market to tap into the European markets. However, what does it or its customers stand to gain?

What Fidelity Bank and its Nigerian customers stand to gain from the UBUK acquisition.

More financial opportunities and market access

Fidelity bank and its customers will get UBUK’s existing customer base as they gain access to investing in the European market. Before this deal, Fidelity bank had no subsidiary in the European continent, limiting foreign market opportunities and access for the bank and its customers. Acquiring a licenced bank in the UK that offers banking services in different denominations, deposit products & card services is a big plus for the Nigerian bank.

UBUK is reputed for providing extensive trade financing to businesses and individuals. These services include secure tracking of physical risks and events in the chain between importers and exporters. Over the years, its transaction and liquidity management services to individuals and businesses have helped its customers to trade internationally with seamless delivery and payments. With the proposed acquisition, Fidelity Bank’s customers will tap into these offerings to do business seamlessly in the UK.

An integrated customer experience

According to the bank, this new deal will create an end-to-end customer experience, especially for commercial customers. UBUK ‘s complementary business operations will enable strong value creation for shareholders and clear benefits for customers, staff, and other key stakeholders. It would also serve its other subsidiaries under the proposed Holdco structure. 

The European bank’s business model and service offering deliver a robust range of banking services to customers doing business from and into Africa, including trade finance, personal banking, business banking, treasury services and commercial lending.

UBUK has a solid African Distribution Network. The relationship with its African counterpart banks, including Union Bank Nigeria, already offers it access to a network that spans all the key commercial centres in Africa. The opportunity will help Fidelity Bank to provide structured trade and commodity finance services to clients that may need to access funding to carry out said services. According to Stanley Amuchie, Executive Director, Chief Operations and Information Officer of Fidelity Bank, customers have complained that they could not do foreign transactions through fidelity bank for a long time. This UBUK deal hopes to change that narrative.

Local customer expansion

In the last two years, Nigeria has experienced a wave of brain drain as young people, particularly in the tech and medical sectors, relocate abroad in search of greener pastures. As more young Nigerians aspire to work and school in Europe, the latest acquisition of UBUK would position Fidelity Bank to meet the needs of this set of customers. The bank is working to create products tailored to a younger generation of customers in its diasporan market. Moreso, the bank plans to make it more convenient for customers who bank with them to access finance for their children or ward schooling abroad.

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