Business News Editor's PicksPolaris & Heritage Bank Set To Merge With First Bank. by adminMarch 12, 2020March 12, 20200653 Share0 Nigeria will soon witness another round of merger and acquisition in the banking sector as financial advisers are putting finishing touches to a merger arrangement between First Bank of Nigeria, Heritage Bank and Polaris Bank.A source privy to the merger informed Daily Independent that both Polaris and Heritage have been looking for a worthy bank to do business with as they have been told by the apex bank, the Central Bank of Nigeria (CBN), after a round of stress test in banks last year to shape up or lose their licence. The source also informed that these three entities are vigorously pursuing the merger and acquisition talks across all available means.Daily Independent gathered that Polaris Bank, formerly Skye Bank, for instance, which is currently under the Asset Management Corporation of Nigeria (AMCON), is up for sale since it became a bridge bank in 2018.The CBN had stated in October last year that seven commercial banks in the country failed stress test in adequate funding at the end of 2018. In a financial stability report published by the bank, it was revealed that in less than 30-day period analysis, seven Nigerian banks were not adequately funded, while in the 31-90 days bucket, nine banks had funding gaps.Overall, the cumulative position for the industry showed an excess of N4.8 trillion assets over liabilities.The banking regulator, however, did not mention the names of the seven of the banks but it privately informed the affected banks to look into the possibility of merger and acquisition to prevent a total collapse.A financial expert, Tola Odukoya, Chief Executive Officer, FSL Asset Management Limited, said the merger will bring good tidings to the banking industry.He said, “It will lead to fresh consolidation exercise in the banking industry. You know that Polaris is currently under the Central Bank of Nigeria, I mean it is an AMCON bank. We were made to understand last year by the CBN that it may call for recapitalisation of some banks”. He added that a merger between these three banks will probably birth the biggest bank in the country.“You know we have more banks than we used to have before with the issuance of banking licence to some merchant banks and regional banks.“Within this our current economic situation one may ask what are these banks doing? Are they providing banking services to the people? Are they offering proper banking intermediation?“To that extent, the merger to me is welcomed. I am of the opinion that it is better to have 10 percent in a big bank than to have 100 percent in a bank that is drowning.“I think it is going to be a good thing. You can see what is happening in Access Bank now. The merger with Diamond Bank has made it the biggest bank in the country and with this First Bank, Heritage and Polaris Bank proposed merger, we may see the unveiling of the biggest bank in the country this year”, Odukoya added.Anor Anyanwu, former Executive Director, Mainstreet Bank, said the merger is not impossible.He said the merger will lead to the emergence of the biggest bank in the country.“If FirstBank, with its financial muscle, is able to acquire these other banks that will be good for the country as it will become the biggest bank in the country.”“But this”, he said, “comes with some drawbacks.”He said there will be duplication of branches because of the spread of FirstBank.“Now that banking is moving away from bricks and mortar branches, some people will lose their jobs and some branches will need to close to achieve profitability”, Anyanwu said.First Bank is the oldest bank in the country and it operates a network of over 750 business locations across Africa, the United Kingdom and representative offices in Abu Dhabi, Beijing and Johannesburg set up to capture trade-related business between geographies.FirstBank’s ownership is diversified, with over 1.3 million shareholders. The bank was founded in 1894. It converted to a public company in 1970 and was listed on the Nigerian Stock Exchange (NSE) in 1971. However, as part of the implementation of the non-operating holding company structure, it was delisted from the NSE and replaced with FBN Holdings Plc. in 2012.Heritage Bank is a large financial services provider in Nigeria. Currently licensed as a national bank, it offers banking and financial services in the country, including the South, West, South East and the North.Polaris Bank, on the other hand, traces its origins back to 1989 when Prudent Bank Plc. was incorporated as a limited liability company. In 1990, the bank was issued a licence as merchant bank. That same year, it re-branded as Prudent Merchant Bank Limited. In 2006, Prudent Merchant Bank Limited merged with four other banks to form Skye Bank Plc. These are Bond Bank Limited, EIB International Bank Plc., Reliance Bank Limited and Co-operative Bank Plc.In 2014, the bank acquired Mainstreet Bank Limited.On September 21, 2018, Godwin Emefiele, the governor of CBN announced in Lagos that the apex bank had revoked the operating licence of Skye Bank. Emefiele also stated that the assets and liabilities of the bank would be taken over by a new entity, Polaris Bank, due to the inability of the Skye Bank’s shareholders to adequately recapitalise the bank after the 2016 intervention.