Although it is far too early to hand any awards to Barclays and Absa for an initiative that will in time surely create a pan-African banking powerhouse, it would not be premature to acknowledge the significance of the most important merger to have been announced in recent times in the Nigerian banking sector. Apart from anything else the merger between United Bank for Africa (UBA) and Standard Trust Bank is a key development in an overbanked and fragmented industry that will spur on rivals.
The merger brings together a relative veteran of Nigeria's banking sector and one of the industry's newer arrivals. UBA is the third largest retail bank in the country (measured by its branch network) and dates back to 1949. Standard Trust Bank is one of Nigeria's new generation banks and has grown rapidly in recent years. It has more than 100 branches spread across the country and is ranked among Nigeria's top five banks.
Both banks have strenuously denied that their merger has been a defensive response to guidelines laid down by the Central Bank of Nigeria. The most significant of these is an increase in banks' minimum capital requirement from N2 billion to N25 billion ($19 million) by the end of December 2005, which is ultimately expected to reduce the total number of banks from 89 to about 25.