Corporate Stories: The back story

behind the UBA & STB Merger

The Beginning of the end

It was late into the night on March 4th, 2004 as directors of United Bank of Africa (UBA)
deliberated on one of the toughest decisions they had ever faced. Just two years earlier, the
bank had been forced into a similar position, only that then it was not as punitive as this
one. This time, they were grappling with a Central Bank of Nigeria (CBN) directive to split
the post of CEO from that of the Chairman.

This CBN directive was like a knife struck at the heart. The business whiz kid and majority
shareholder of the bank, Hakeem Bello Osagie (HBO), had been asked by the CBN to resign
within 24 hours. Thus, a decision had to be taken that night. As the board deliberated late
into the night in a bid to address the predicament, it became clear that there was no way
out.

The reign of Hakeem Bello Osagie as one of Nigeria’s most enigmatic banking Chiefs, had
come to an abrupt end. For the Nigerian banking sector which watched in amazement at
how this young man rose to become a symbol of the new era of Nigerian banking, the news
of HBO’s fall from grace still ranks as one of the shocking moments in the sector, which at
the time was entering an uncertain future. But as the saying goes, when one door closes,
another opens in the never-ending chapters of history.

See our other corporate stories

Flash back – Era of predatory banking

It was the early 1990s and the government of Ibrahim Badamasi Babangida (IBB), former
dictator and Military President of Nigeria, had just decided to liberalize the banking sector.
As part of the Structural Adjustment Programme (SAP)-induced economic reforms, his
administration oversaw the issuance of a flurry of banking licenses that resulted in Nigeria’s
financial sector becoming awash with the so called “new generation banks”. The banks were
new and stylish. They promised depositors heaven and echoed the never-ending slogan that
Nigeria was open for business.

Their promise of a new Nigeria was aptly depicted in the bout of captivating advertorials
that flooded local TV channels in the 90’s. One of such adverts was one with a synopsis that
displayed Nigeria in all its natural beauty. It opened with a water fall scene and quickly
moved on to a young man playing a flute and then to a cock crowing. It then quickly moved
to a group of young men beating drums elegantly and then to women pounding away ahead
of their dinner. A young man harvesting cocoa will follow quickly shifting to another
drinking fura de nunu. As viewers watched in awe the display of the cultural diversity of
Nigeria and its rich agricultural heritage, a serenading voice slides in welcoming its viewers
to Nigeria. The voice was remarkably in a foreign accent, which conveyed the suggestion
that Nigeria was open to foreigners for business. As your curiosity increases at the spectacle
on TV the voice announces succinctly: “when you are thinking of foreign investment, the
natural place to come is Nigeria and the bank to reach is Crystal Bank, where we make
banking a real pleasure.” As the ad comes to an end, you are reminded quite confidently:
“Crystal Bank, where to bank in Nigeria”.

Crystal Bank was one of the hundreds of banks that operated in the early nineties under the
government of IBB. The founder of the bank, Chief Zebulon Abule was rumoured to have
setup the bank to remain relevant in the politics of the early 1990s. In the 90’s politicians
desperate for power had to keep themselves busy as former military leader, Ibrahim
Babangida kept dithering on the transfer of power to a democratically elected President.

According to rumours at the time, Crystal Bank funded the Cement importation business of
the founder, and gave him loans under unfavourable terms, which really is was not a unique
case. The banking sector was thus laden with poor corporate governance. After the
deregulation of the banking sector by IBB, the number of commercial and merchant banks
went from 40 in 1985 to 115 in 1995. The banking industry also diversified into specialized
banking services, giving rise to primary mortgage institutions, which as at 1995 were 280 in
number. Community banks numbered up to 1355 in 1995.

The sheer number of financial institutions made it difficult for regulators to keep up with
the new generation banks, as they were called. By 1994, 48 out of the 120 commercial
banks were distressed while 7 were on the fringe of distress. Twelve were reported to be
outright illiquid or technically insolvent. Only 72 banks representing 60% of the total were
liquid and adequately capitalized.

It was a disaster of unimaginable proportions waiting to happen. Depositors lost billions of

Naira in deposits and prisons were littered with ex bank chiefs who stood accused of fraud
and financial misappropriation under the government of an unforgiving military junta,
General Mohammed Abacha.

The Nigerian Deposit Insurance Corporation, NDIC which was setup about 7 years earlier
(1988) under the recommendation of then-CBN Governor, Ola Vincent, was faced with its
worst nightmare.

In one example of bank failures, 2 high profile banks, Alpha Merchant bank and the United
Commercial Bank were declared distressed. Over N1.8 billion belonging to Alpha Merchant
Bank depositors was lost, including government agencies which lost about N1.2 billion.
United Commercial Bank owed the CBN over N903 million in loans and advances as at the
time it collapsed. Included in the list of banks that the CBN could salvage from distress was
African Continental Bank (ACB) and Crystal Bank.

As the wave of banking sector crisis swept through the country, a door was seemingly
opening for a new crop of banking whiz kids that would change the face of Nigerian banking
forever. In February 1995, a young 32-year-old man named Anthony ‘Tony’ Onyemaechi
Elumelu (TOE), who was an Executive Director at Linkage Assurance Company Ltd had had
enough. Tony Elumelu informed his Chairman, Ebitimi Banigo that it was time to pursue a
solo career.

TOE as he will later be called by friends and associates had served Chief Banigo for over 6
years in All States Trust Bank in capacities such as Branch Manager and Regional Manager
in Port Harcourt. According to some rumours, he had his first fall out with Chief Banigo,
after stories emanated that he made millions in a forex deal. TOE was subsequently
withdrawn from All States Trust Bank and sent to Linkage Assurance as Executive Director.
Linkage Assurance was the insurance arm of the renowned Conglomerate, chaired by the
onetime banking mogul, Ebitimi Banigo.
Undeterred, TOE continued to serve his boss, bidding his time as he watched events unfold
in the banking sector, which was reeling in losses.

TOE in tune with his middle name, “Onyemaechi” (which roughly translates to “who knows
tomorrow”) already knew that Nigeria was on the cusp of a banking revolution. He called
his friend, Albert Okumagba and Chuka Onwuchekwa, informing them that he wanted to
setup a new company.

The birth of “a Standard Trust Bank”

Albert and TOE had struck a unique relationship back in 1987 when they were studying for
their master’s degree in the University of Lagos. Their relationship blossomed over the
years, with Albert going on to become TOEs best man at his wedding in 1994. TOE returned
the kindness a year later.

TOE informed Albert and Chuka that their new company will be named Banc Garanti
Limited (BGL). The plan was to use BGL as a vehicle to achieve their goal of conquering the
financial sector. To setup BGL he raised seed capital by pooling funds from family and
friends. According to close associates, TOE called these friends “intellectual friends”,
suggesting that he pitched to those who he thought had knowledge of the sector and thus
could easily be persuaded to invest in a new enterprise.

Leveraging on their experience and tenacity, BGL also started making money by
helping technically insolvent banks to facilitate mergers and acquisitions. TOE soon led the
team to acquire a distressed bank named Merchant Bank of Commerce (MBCOM), which
they later renamed to Continental Trust Bank.

MBCOM as it was called upon acquisition, had Ike Nwabuoku as its Managing Director, with
TOE as an executive director. As ED of MBCOM, TOE leveraged on his experience and unique
insights into the insolvency of most banks, deciding it was time to acquire a distressed
commercial bank. They had their sights set on African Continental Bank (ACB), Pinnacle
Bank, Commercial Bank of Africa and Crystal Bank.
According to an official account, TOE articulated and wrote a memo to the CBN, applying to
takeover Crystal Bank. As the CBN dithered for weeks on TOE’s proposal, he wondered
what other levers he could pull to push through this request.

Most people who knew TOE opine he had a knack for intensely following through with
projects that are directly under his purview. Failure was hardly an option even if it meant
using unorthodox means. As it became clear that the back and forth between the CBN and
the Ministry of Finance could jeopardize his vision, he moved on to plan B.

TOE approached one of his non-executive directors at MBCOM, a certain Brigadier General
Abba Kyari to help use his connections in the Ministry and the CBN to secure the approval of
his proposal. This after all, was why you had men of this stature on your board.

The General, who was friends with Mr. Tony Ani, the Minister of Finance at the time also
had connections at the CBN. He soon got feedback from top officials at the CBN that TOE’s
request was being viewed favorably. But that was not enough. TOE kept pushing.

As the deadline day to submit bids drew nearer, they flew to Abuja to continue lobbying,
shuttling between the CBN and the Ministry of Finance to secure the numerous approvals
that had to be obtained. In hindsight, TOE was doing the CBN, and to a large extent the
depositors at the beleaguered banks, a favour. But this is government. You would have to
sweat your way to achieve any goal even if it means paying government officials for doing
what should be their jobs.

It was now 30 minutes before deadline and they were yet to secure CBN’s approval. TOE’s
heartbeat raced as government bureaucracy stood between his future and failure.

Through the help of the General, the Ministry requested for a N100,000 non- refundable bid
deposit for the bank, which TOE promptly paid. To fund this transaction, they secured the
approval of the board at MBCOM. By the time they were done, it was too late to get a written
approval. And so, they left Abuja with a “verbal approval” for the deal.

TOE had scored a major victory. As celebrations ensued in Lagos, TOE’s attention turned
towards the task ahead. They had to raise the purchase consideration. According to
historical accounts of the transaction, MBCOM led the acquisition of the bank by injecting
over N500 million into the bank. In the wake of the crisis, the CBN had increased the
minimum share capital for commercial banks to N500 million.

The new owners of Crystal Bank went a step further. They increased their share capital to
N750m. MBCOM setup an SPV named Merchant Bank Ventures which in turn owned about
85% of the new bank.

In tune with keeping everything in house, BGL was also appointed the lead arranger of the
deal, pocketing lucrative fees for the now leading investment and fund-raising house in the
financial sector.

An unofficial account of this transaction suggests that TOE had approached some of the
largest depositors at the then Crystal Bank. He made them an offer they couldn’t refuse.
TOE, it was alleged, told them that he was planning to take over the bank and needed their
support. He told them he wanted to assure them that their deposits were secured but that
he needed one favour – that they should convert their deposits into shares and become
shareholders in the new bank.

It did not end there.

He also informed them that he needed them to match their deposits with even more
investment in the new bank. In return, he promised to make them even richer and solidify
their stand as billionaires. One of the alleged ‘major depositors’ was a certain Rasheed
Ladoja.

The depositors, bemused at the brazenness of this 34-year-old banker, realized that they
had no choice. This was an offer they could not refuse. A few weeks later, MBCOM
announced the constitution of a new board of directors of a newly created bank, Standard
Trust Bank. The name was crafted by none other than TOE himself. Crystal Bank was dead
and buried and Standard Trust Bank was birthed.

On the board of the new bank were, Senator Rasheed Ladoja, Chief Annie Okonkwo, Alhaji
Yusuf Ali, Chief Ferdinand Alabrabra, Ike Nwabuoku, Abba Kyari as Chairman and TOE as
Managing Director. Thus began a new era that would oversee the transformation in
Nigerian banking, with Tony O Elumelu as one of its leaders.
The announcement of the takeover of the defunct Crystal Bank (now Standard Trust Bank)
took everyone by storm. Understandably, critics and admirers of TOE wondered how he
pulled off this feat considering his relatively humble background. Just as his rise brought
him stardom, critics went on a prowl.

The Making of a Lion

Rumors persisted about how he went from a Branch Manager in All States Trust Bank to
become the owner of commercial bank. The rumored ruse between him and Banigo spread
among critics and supporters alike, until Chief Banigo laid the matter to rest. A Harvard
Undergraduate of Economics, Chief Banigo came into Nigerian banking with a wealth of
experience. Before returning to Nigeria, Chief Banigo had worked in Citibank, New York;
Citicorp International Bank and Chase Manhattan Bank. Upon returning to Nigeria he was
made Managing Director of International Merchant Bank of Nigeria, one of the most iconic
banks of the 80’s.

In IMB, he supervised a legion of banking executives that would proceed to dominate the
banking sector in Nigeria for decades. Despite his failings, Chief Banigo, is today viewed by
many as the “Godfather” of modern day banking in Nigeria. TOE learnt from him early on
that the nascent financial services sector, just like politics, was all about permanent interest
and keeping relationships cordial. Thus, being in good stead with a personality like Banigo
was critical to achieving his goal of acquiring a commercial bank. Chief Banigo will in 1995
personally pen TOE a letter of appreciation and commendation, wishing him well on his
next venture. Associates of TOE maintain till today, that he carries this letter in his briefcase
wherever he goes. Loyalty was sacrosanct for TOE.

Unlike today, the banking sector TOE came to be a part of was a much different place in the
90’s. This was a period when banks where still reeling from a crisis and deployed risk
management techniques that favoured a measured approach to mobilizing customer
deposits.

The Nigerian banking space was divided into two main categories. The old generation and
newer generation banks. While the former relied on their proven service delivery, reliability
and trust to attract deposits, the new generation banks relied on aggressive marketing
schemes that often depended on perception, coercion and relationships to attract
deposits. Seeing that trust was a major factor in attracting deposits from depositors who
had been previously scourged and who lost confidence in the banking sector, the word
“Trust” became a nomenclature for deriving names of newer generation commercial banks.
But TOE also had a different approach to banking that heralded his unorthodox ways.

Just as banks were consolidating their market share in key commercial nerve centers in the
country such as Lagos, Port Harcourt, Aba, Onitsha, Kano, TOE followed a more precarious
route. He decided his bank was going to open branches in every state capital in the country
and other locations that had business opportunities. In fact, by October 1997, just a few
months after he took over Crystal Bank, STB had opened a branch in Abuja. The move,
unorthodox at the time, was chided by critics who wondered how a new bank with a
modest balance sheet could operate branches in locations that lacked commercial benefits.
For TOE, this was all part of a grand plan.

STB also ushered in an era of bold and aggressive marketing in commercial banking. TOE,
according to some sources, favoured an aggressive approach towards growing the bank’s
deposits and often led the way in doing this himself. In one account, he gathered a stack of
complimentary cards collected from the numerous people he had met at airports, hotels,
and the lobby of government offices. A message was written on each card and transmitted
to the STB branch manager in the location nearest to the office address of the contact.

Branch managers who received this card knew immediately that they had a target to
acquire this contact as an account. TOE would often call the branch head asking if the
customer had successfully opened account. A negative response often attracted severe
consequences. Another account revealed that TOE will often lay siege in the banking halls in
the evenings as he awaited marketers who were returning from the deposit drives. As you
enter the banking hall you were asked “how many accounts did you open?” Remarks like:
“look at this guy, he came back empty handed” was not uncommon and was difficult to
stomach by some of the marketers. For those who got positive remarks, their targets were
subsequently increased. Opening of new accounts was very competitive among employees,
a competition that often required extreme means to win.

As the competition rose within the bank, so did it with other banks. New Generation banks
alike deployed even more aggressive tactics towards deposit drives. The new generation
banks introduced several initiatives that was geared at extracting deposits from
unsuspecting depositors who felt safer stashing their cash in older generation banks or in
their homes.

The approach was two pronged: First was to relax some of the bureaucratic operating
procedures in order to make their services faster and much better than the sloppy services
that was pervasive with older generation banks. The banks also introduced higher interest
rates to customers in exchange for deposits and treated their loyal customers like Kings.

The second approach was to offer more flexible management styles and improvement of the
working condition of their employees. Staff of newer generation banks earned twice as
much as their peers in older generation banks and were barred from joining the labour
unions. As the rewards towered in comparison to older generation banks, it conversely
paled in comparison for job security. Also, these banks quickly deployed and perfected the
use of women marketers. They adopted the strategy of recruiting female graduates as
marketers and unleashing them at unsuspecting men whom with little persuasion would
open accounts. STB epitomized most of the characteristics of the New Generation Banks,
and its deposits soared.

By deciding to open branches in every part of the country, TOE was strategically targeting
public sector funds – an area of opportunity that his competitors had largely ignored. The
strategy according to insiders was named “insurgent” banking and came at a significant
cost. Branches reported losses and chasing deposits became even harder.

While some employees excelled against all odds, others who couldn’t stand the
psychological turmoil bucked under the pressure. But TOE was unrelenting. He told his
associates that soon, the branches would turn in profits. The move finally paid off in 1999 as
democracy was ushered in. Under democracy, each tier of government was independent in
terms of their administration and more importantly their finances. TOE knew the states
would require funding to finance projects and was already strategically positioned to seize
the opportunity. In return for granting loans to states, STB secured Irrevocable Standing
Orders secured against the FAAC allocations of the states and their local governments. The
3 tiers of government also required the services of banks where they could deposit their
allocations. STB was positioned to meet this need.
Furthermore, STB’s positioning gave it another incredible benefit. The CBN had included
branch network as a criterion for being considered as a settlement bank. There were only 7
out of 89 banks appointed as settlement banks and ostensibly, STB was one of them.

The bet had paid off, or so it seemed.

TOE held countless retreats with his employees, where he often dished out kolanuts to help
keep them awake late into the night. In one remarkable encounter, he sat and listened to his
executives present an overview of the Nigerian economy. After beautifully presenting an
overview and outlook of the economy for the ensuing year, the presenter projected a
targeted profit of N600 million for the financial year. This was about three times the prior
year’s profits. According to sources, TOE immediately stood up and left the hall in
frustration. Within hours he returned with his own projections and gathered everyone back
into the hall. He told participants that the bank would target a profit of N1 billion from the
N600 million they had initially projected. By year 2000, the bank declared a profit of over
N1.2 billion (from N221m), the first by any bank at the time.

Followers of the banking sector in this era still have divergent views of how banks came to
declare record profits. Just as it is today, commercial banks made profits from lending at
exorbitant interest rates, excessive fees and forex transactions. Nearly all banks were in on
the game and soon the race for astronomical profits began.

As other banks jostled for branch expansion and paper profits, TOE set his eyes on an even
bigger target; He had in a seminar in 1998 declared that banking consolidation would ensue
in 5 years.

His next goal was to become a top-five bank.

When vision and opportunity come together

After the retreat, the conclusion at was that to become the number one bank in Nigeria, STB
would have to acquire one of the older generation banks. Union Bank, First Bank and UBA
were shortlisted as the likely targets. For some of the attendees of the retreat, the thought of
acquiring a bigger bank was unimaginable and sounded like a dream.
TOE immediately set out to put his plans into motion by listing STB as a Publicly Quoted
Company in 2003. By December of that year, the bank launched its Initial Public Offering
(IPO). Standard Trust Bank offered about 1 billion units at N4 per share to the Public in an
offer that was to close by January 2004.

In typical, TOE style he reportedly gave his comrades a target to raise the N4 billion, the
total envisaged IPO purchase consideration. According to a different account, it was
understood that he alone took on the challenge of selling 500 million units of the stock and
then giving the staff another 500 million units to sell. TOE would personally raise the N4
billion while he expected his marketing team to raise a combined N2 billion.

The marker was laid down and in 2003, just when the jingle bells were ringing, Nigerians
would come to witness an IPO like never before. STB marketers marketed the shares with
the same vigour and tenacity as when they were driving for deposits. Immediate family
members, relatives, friends and well-wishers, colleagues of spouses, church members and
associations. No one was spared in this never-before-seen marketing of an IPO.

Road shows were organized across the length and breadth of the country with TOE
traveling to about 17 locations to sell the IPO. By the time they were done, about 60,000
Nigerians had subscribed to the shares of STB by more than 2 folds.

The Standard Trust Bank IPO was oversubscribed by 154%, unprecedented at the time.
Instead of raising N4 billion, the bank raised a whopping N8.4 billion. TOE had the cash he
needed to fund any potential acquisition. And so, by the summer of 2004, the CBN Governor,
Prof Charles Soludo, promising to change banking, jolted the banking sector in one of the
most brazen regulatory pronouncements ever made in Nigeria.

He announced to Nigerian banks and the world that the CBN had increased the minimum
capital base for banks to N25 billion. The banking sector, perplexed by this action,
commenced intense lobbying to get this brazen policy reversed. TOE soon disappeared from
the scene as he pondered on his next move.

Across the Island, where the older generation banks held sway, there was an air of
confidence that they would make the N25 billion cut. It was inconceivable that a new
generations bank would be capable of raising the required capital, let alone having more
than enough capital to be able to swallow an older generation bank.

But as Hakeem Bello Osagie (HBO) – who had been ordered to resign from UBA – licked his
wounds and pondered on his corporate future, he received a call from TOE. Just like in the
acquisition of Crystal Bank, TOE made HBO an offer he couldn’t refuse. It was an offer to
acquire an estimated 35% of his shares in UBA – a move that would put STB in a better
position to acquire its bigger rival.

Flash Back 2004….The Game is over

On March 9, 2004, a newspaper headline read out boldly “UBA Loses N11.08 billion in
Market Value”. This was just 5 days after the shocking resignation of the banking mogul,
Hakeem Bello Osagie. The Central Bank’s instruction on March 2nd required that he resign
from the board with immediate effect or it would dissolve the board unilaterally. The CBN
also directed that the bank disengages its Vice-Chairman, Mallam Abba Kyari, and its
Executive Director of Corporate Affairs, Mrs. Mairo Bashir. (Mallam Abba Kyari, who is the
current Chief of Staff to President Buhari was once the Managing Director of UBA).

The CBN’s order was so stern that it did not give HBO and his board any room to wait till
March 23rd to meet, to perhaps forestall any chance of them being able to appoint a
successor that would do their bidding. Just like in African politics, choosing the right
successor is one of the most important decisions a bank CEO or Owner would make.

Because UBA was yet to inform the Nigeria Stock Exchange of the resignation of its
chairman, it faced another round of sanctions by the Exchange. The stock market had had
enough already, and a sell-off ensued in no time. The bank’s share price plunged 28% from
a 2004 high of N15.48 per share to N11.14 as at Friday, March 5, 2004.

Sh*t had hit the fan.

As a change of guard befell UBA, Nigeria’s 3rd largest bank at the time, another loomed at
the CBN.
Enter the Professor

The CBN Governor, Joseph Sanusi’s term was ending and he promptly informed President
Obasanjo of his intention not to seek another term. To take his place was an erudite 44-
year-old Economics Professor who was a member of President Obasanjo’s economic team
and the architect of the economic policy of the OBJ Administration – the National Economic
Empowerment and Development Strategy (NEEDS).

On April 30th 2004 and in a huge departure from the norm, the government appointed
Professor Charles Soludo as the new CBN Governor. This was the first time, Nigeria would
have a CBN Governor who was not from the banking industry. While economists cheered,
bankers welcomed him with cautious optimism. Soludo was someone they didn’t know
quite well and couldn’t decipher. Soludo was young, confident and assertive and had in the
previous year been blamed for making a comment that briefly crashed the naira. There was
palpable fear that such a man could upend the status quo in the banking sector. Soon,
Soludo would proof them right.

On Tuesday, July 6, 2004 Prof. Soludo announced N25 billion as the new capital base for
Nigerian banks, up from N2 billion. He also fixed December 2005 as the deadline for banks
to comply. The news sent shock waves round the banking industry, and left the newer
generation banks seething. The Senate kicked against it and promptly summoned Soludo to
explain what in the world he was thinking. The Nigerian Labour Congress and the
Manufacturing Association of Nigeria complained that it would lead to another run on the
banking industry.

As the country stood in shock and reacted in frenzy, TOE went into stealth mode. He would
disappear from the scene in the last quarter of the year plotting how his bank, Standard
Trust would survive its next big threat. Just as TOE had predicted years earlier, the banking
industry faced a massive consolidation on a scale never to be imagined. To avoid being a
target and getting caught up in the impending storm, they had to act fast. And so, TOE
immediately changed the strategic direction and ideology of the bank.

The new STB would emerge in the form of a Lion, relying on size, efficiency and brutality to
confront its future.
Fast forward – The art of deal making

Before that fateful call to HBO, TOE had watched proceedings in UBA over the last few
months. Like a patient lioness waiting to pounce on a wounded prey, he quickly realized
that of the 3 biggest banks, UBA was most vulnerable.

As the situation in the bank deteriorated, coupled with the rising tensions following the N25
billion capitalization deadline, negotiations with HBO stepped up in the background.
Sources reveal that he set up committees to run the day-to-day operations of the bank while
he disappeared from the scene for 3 months.

By January 2005 he reappeared, calling a meeting of all staff from manager levels and
above. It was to break the news that their bank, STB, was going to acquire/merge with UBA
Plc, Nigeria’s 3rd largest bank.

Those present at the meeting were stunned in disbelief. No one fathomed that this
audacious acquisition was indeed in the offing. STB had the balance sheet to meet the CBN’s
deadline but the goal of acquiring a bigger bank was daunting.

Just months before, STB had acquired Continental Trust Bank, a relatively smaller bank and
a testing ground for what was to come.

After breaking the news to employees, on July 18, 2005, UBA/STB would announce to the
world of their plan to merge into “one big bank”.

As the banking industry pondered the implication of what had just happened, TOE informed
some selected VIPs personally of what happened.

This was another page from his playbook.

To understand how TOE operates, the book, 48 laws of Power is a perfect guide.

The first law, “Never outshine the master” was a particularly stark attribute. Always make
those above you feel comfortably superior. That night, he picked up the phone and dialed all
the people he knew who could influence the deal, either positively or negatively.
It was psychologically important that they hear from him directly before reading it on the
pages of the newspaper the next day.

Law 43: “Work on the hearts and minds of others” was at play. Soon after the
announcement, TOE formed several sub committees tasked with seeing through the deal. A
month later, February 4th to be precise, the STB team arrived UBA to commence
negotiations on what would be the largest merger in Nigeria’s banking history.

The financial sector had never witnessed a merger of this proportion and scale and so UBA
had to hire McKinsey to help midwife the merger. Sources suggest that McKinsey had a
playbook for mergers like this and set out to implement it.

Soon, bureaucracy would get in the way. As negotiations slowed and tasks piled up, TOE
became increasingly frustrated. According to sources, his unorthodox ways manifested
during this period.

TOE was renowned for moving around with a small team of loyal insiders who implemented
some of his more pertinent targets. The team of loyal insiders were referred to as “Marines”
by staff, some of whom dreaded their rising influence. These guys rose to prominence in the
early days of branch expansions, moving in at the behest of TOE to deliver when it seemed
like project timelines were not being met, risking cost escalations and embarrassments.

The Marines hardly failed to deliver.

They over the years built a fearsome reputation as TOE’s henchmen. And so once again, they
would become handy in the toughest task yet.

At some point, committee members for the merger risked being rendered irrelevant,
especially if they failed to deliver on crucial tasks. The Marines would move in and step up
activities. Sometimes, to deliver on tough tasks, use a small team that is focused and nimble.
Their age, experience and levels are irrelevant. The only thing that matter is their tenacity
and ability to execute on orders.
Challenges sprung from all angles. TOE, against popular reasoning, had insisted that the
merger would not result in loss of jobs. This was a key aspect of the merger and one
narrative he wanted to be associated with the merger. The optics always mattered to TOE.

Merging an old and new generation bank was tough to execute considering the many
psychological, administrative and financial implications. Mergers are expected to produce
synergies but many don’t realize the non-financial cost associated with achieving this
daunting task.

There were a lot of challenges that lay in the execution. For example, the employees at UBA
earned about half as much as those in STB. A Manager in UBA earned less than an Assistant
Manager in STB. This was a morale and psychological hurdle to deal with. How would they
compensate the Manager in the Old UBA without blowing the budget? How would they
slash the salaries of the Assistant Managers in STB without hurting morale? It all seemed
like a zero-sum game which was frankly not an option.

TOE and his team decided on an action plan. They would promote the Assistant Managers in
STB to full Managers while they retained their salary levels. The Managers in the old UBA
remained managers but would have their pay increased.

It seemed like a fair deal. Being who we are, insatiable homosapiens, some STB employees
saw this as a huge opportunity. They had to cash in. Now a Manager in the new UBA but
without a pay rise, the STB employee would have to figure out a way to cash in on this
upgrade. To meet this goal, the insatiable few would approach other banks for possible
hiring. Being a staff of STB had inherent financial value. For example, a newly promoted
Manager in the new UBA who did not get a pay rise would take a job in another bank as a
Manager but with a pay rise. The money they could not get in STB, they got in another
bank. In their quest to boost staff morale by introducing pay equality, STB started losing key
employees.

You can’t please everyone in life. There was even a much larger problem for TOE: The
merger also meant some management level staff had to be exited or managed. In one
prominent case, the position of Chief Risk Officer for UBA gave TOE his biggest
challenge. Up there was a promising top executive by the name, Sanusi Lamido Sanusi (SLS).
One of the sharpest minds at the bank. From STB was another up and coming star and a
member of TOE’s inner circle, Victor Osadolor, the ED of risk at the bank.

SLS, though a Chief Risk Officer was well connected and had lineage linked to the Emirates
in the northern city of Kano. TOE, one not to keep foes went at length to appease everyone.
No raw deals for sensitive people that could be a problem in future

Everyone was important, no matter how small, talk less of someone with links to the high
echelons of elite northern Nigeria.

SLS would not report to Victor Osadolor and vice versa.

As a student of Machiavellian principles, TOE knew he had to manage this deftly. Amid the
storm that was raging in UBA, other banks also saw an opportunity. While they had missed
out on the acquisition, they would not miss out on potential significant hires. TOE still had a
decision to make. Fortune, they say often favours the brave; people like TOE always had a
break when none seemed possible.

SLS would later be poached by the rival First Bank Plc in September 2005. 3 years later, on
August 2008, First Bank announced SLS would be the MD/CEO of First Bank when its
MD/CEO Jacobs Moyo Ajekigbe retired on December 31, 2008. Six months after assuming
the CEO post at First Bank, he was announced as the Governor of the Central Bank of
Nigeria.

Another bone of contention in the STB/UBA merger was the name of the new bank. TOE’s
inner circle preferred to retain the name STB, but TOE had a broader view of the deal and
knew optics mattered. STB was in the driving seat but the name “United Bank for Africa”
aligned with his vision to be the number one bank in Africa. And so, to remember their
heritage, they would put beside the UBA name, a logo of STB. On August 1, 2005, Tony
Onyemaechi Elumelu assumed the position of MD/CEO United Bank for Africa.

The merger was concluded and STB ceased to exist. The merger required that two ordinary
shares of STB be exchanged for one ordinary share of UBA. The old UBA guard would have
about 8 of their directors either resign or retire, including the Managing Director, Aliyu
Dikko.
STB on the other hand had about 7 appointed to the board of the new UBA, signifying who
was on the driving seat. By 2006, UBA had a total board of directors of 14 members with
TOE as MD/CEO and Kayode Sofola as Chairman. The merger also created a behemoth of
380 new branches, the largest in West Africa. UBA and STB’s 5 million and 2 million
depositors respectively also made them a formidable force in Nigeria’s retail banking
space. STB had exchanged 4 billion of its shares for 2 billion of shares in UBA at a value of
N10 per share, bringing the purchase consideration to about N20 billion. By September
2006, the first annual report of the merged bank, UBA’s balance sheet sized had risen from
N332b to N1 trillion. The bank’s net assets also rose from N19.4 billion to N48.5 billion.
Gross Earnings rose from N26 billion to N90.4 billion while profits rose from N4.9 billion to
N11.5 billion. Earnings per share however dropped from 263 kobo to 187 kobo, the effect of
an increase in shareholdings due to the merger.

Post-merger from the rear view

The deal between UBA/STB remains today as one of the most significant events in Nigeria’s
corporate history. Critics might point to the fact that the merger has so far fallen short of
some of its lofty expectations such as being the number one bank in Nigeria and Africa.

Rather than being number 1, ten years after this landmark merger, it remains the 3rd
largest bank in Nigeria in terms of balance sheet size. In terms of market capitalization, it is
also the 3rd at about N340 billion.

The merger was by and large a success. But perhaps, the most valuable thing about this
merger was the lessons learnt for generations to come.

In a country where opportunities are rare for those from humble backgrounds, if you dare
to dream, you will succeed. With determination, tenacity, focus and ambition, anything is
possible.