Spring, United Mortgage banks near merger deal
Spring Mortgage Bank Plc (SMB) and United Mortgage Bank (UML) have concluded a merger agreement, in a move to scale through the hurdles of the ongoing reforms in the mortgage sector, with minimum capital requirement pegged at N2.5 billion for state operations.
Spring Mortgage, which has been rated by the Federal Mortgage Bank of Nigeria as one of the top three Primary Mortgage Institutions (PMI) in processing and accessing National Housing Trust Fund loans, may soon seal this alliance deal with United Mortgage to get more operational strength and retain its classification as PMI.
The duo had in April 24, 2014, signed a Memorandum of Understanding in relation to the merger scheme.
The development, after the approval of the Central Bank of Nigeria and the Securities Exchange Commission shall be renamed United Mortgage Bank Plc and would result merging of both business into one.
The Managing Director and Chief Executive Officer, United Mortgage, Walter Akpani, who stated this at a ‘court ordered meeting’ with stakeholders in Lagos, said the merger would help both firms to meet the capital requirement by the stipulated deadline, provide compelling opportunity to also leverage the brands both firms have built.
He said it would also lead to creating a bigger firm that will be able to compete effectively within the PMI industry, improved operational efficiencies as a result of cost savings and improved capital base among other reasons.
Both companies’ shareholders, in a voting exercise, showed support for the proposed merger, as majority of them were in the affirmative.
Akpani, who subsequently thanked shareholders and explained that the plan would be beneficial to customers, shareholders, employees and the mortgage sector at large, also added: “The merger will provide a strong financial muscle to the post-merger United Mortgage in executing bigger mandates.”
In a letter from the Chairman of United Mortgage Bank, Col. Paul Obi (Rtd), dated July 23, 2014, and read to stakeholders at the meeting, he said: “It is worth mentioning that United Mortgage currently owns 47.87 per cent in Spring Mortgage Plc. It is against this background that the proposed merger is conceived, with the aim of consolidating the mortgage business of both UML and SMP.
“The Directors of both Companies are of the opinion that this merger will improve the business of the Post-Merger United Mortgage and create additional value for the shareholders of the Post-Merger UML.
“The Scheme is set to be achieved by the transfer of the assets, liabilities and undertakings of SMP to UML, in exchange for which ordinary shares of UML will be issued to the other shareholders of SMP in the agreed manner. As part of the merger process, your Board engaged the services of WSTC Financial Services Limited as Financial Advisers and Jackson, Etti and Edu as Solicitors, to guide its decision-making and manage the process.”
Already, the scheme has been cleared by the Approval-In-Principle received from the SEC, which was present for the consideration and approval at the Court-Ordered Meeting, held on May 21, 2015.
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