Union Bank Struggles Amid Economic Challenges and Ownership Crises

Union Bank of Nigeria (UBN), one of Nigeria’s oldest financial institutions, is grappling with significant economic challenges and internal crises that have hindered its growth. Once a dominant force in Nigeria’s banking sector, UBN now struggles to keep pace with newer and more dynamic banks.

Established in 1917 as Colonial Bank, Union Bank has a rich history. It underwent several transformations, becoming Barclays Bank DCO in 1925, then Barclays Bank of Nigeria Limited in 1969, and finally Union Bank of Nigeria in 1979. Despite its illustrious past, UBN’s recent performance has been underwhelming compared to its peers.

UBN’s current standing is reflected in its asset base and branch network. As of December 2023, Union Bank ranked 10th among Nigeria’s Deposit Money Banks (DMBs) with an asset size of N3.65 trillion and 258 branches. In contrast, newer banks like Access Bank and Zenith Bank boast significantly higher asset values and branch networks.

Union Bank’s customer base also lags behind, with 7.8 million customers compared to the 52 million of Access Bank and 48 million of GTBank. UBN’s clientele largely consists of long-time, elderly customers, many of whom have been with the bank for decades.

The bank’s deposit growth has been sluggish. As of December 2023, UBN was not among the top 10 banks with the highest deposits, trailing behind institutions like Zenith Bank, Access Bank, and UBA. Analysts attribute this to a lack of depositor confidence and ineffective marketing strategies.

A significant factor contributing to Union Bank’s struggles is its fluid ownership structure, which has led to persistent boardroom squabbles and leadership crises. These issues have stymied the bank’s progress and stability.

The bank faced a major upheaval in December 2021 when its core investors sold 89% of their shareholding to Titan Trust Bank Limited. However, this transition did not resolve its internal issues. In December 2023, a special investigation revealed that the former CBN governor used ill-gotten wealth to establish Titan Trust Bank, which then acquired UBN. This led to the sacking of UBN’s board by the CBN in January 2024, further exacerbating the bank’s instability.

Industry experts predict that Union Bank may be sold to new investors as the current ownership faces ongoing scrutiny and legal challenges. This ongoing turmoil is likely to prevent UBN from reclaiming its former glory and keeping up with its competitors in the banking sector.