UK-Based Nigerian Banks: Engaging in Transatlantic Financial Operations

UK-Based Nigerian Banks: Engaging in Transatlantic Financial Operations

**Nigerian Banks Expanding Presence in the UK for Strategic and Regulatory Reasons**

In a strategic move to enhance their global presence, several Nigerian banks have established subsidiaries in the United Kingdom. This trend, which has been growing over the years, is driven by a need to comply with stricter capital requirements, broaden their investor base, and access long-term and risk-mitigated financing structures.

The first Nigerian bank to open a subsidiary in London was Zenith Bank (UK) in early 2007. Since then, Guaranty Trust Bank (GTB) followed suit by setting up its UK subsidiary, Guaranty Trust Bank (UK), in March 2020. Union Bank of Nigeria UK received its wholly-owned subsidiary status in October 2004, while FBN Bank (UK), a First Bank of Nigeria subsidiary, threw off branch status two years earlier.

One of the primary reasons for this expansion is access to international capital and regulatory compliance. Nigerian banks like GTBank (GTCO) are listing on the London Stock Exchange to raise significant capital, with GTCO aiming to raise about $100 million through its LSE listing. This move helps them comply with higher capital requirements imposed by the Central Bank of Nigeria, which recently increased the minimum capital threshold for banks to 500 billion nairas (around $327 million) by March 2026.

By establishing a presence in the UK, Nigerian banks improve their international visibility and broaden their investor base. This boosts their long-term growth strategy and capital adequacy. FBN Bank (UK), for instance, has a focus on Francophone Africa, with a Paris branch established in 2007.

The UK, and London in particular, is a global hub for trade finance and international banking. Nigerian banks establish subsidiaries there to be closer to clients and partners, facilitating smoother transaction flows and relationship management in trade finance. Having a UK base helps them tap into sophisticated blended finance structures, engage multilateral institutions (like the World Bank and African Development Bank), and work with export credit agencies (such as UK Export Finance), which are critical for credit enhancement and risk mitigation in trade projects.

Strategic positioning in underserved niches is another benefit. Banks like FBN Bank (UK) are planning to set up hubs in London to fill gaps left by international banks and local banks that cannot compete due to funding costs or regulatory constraints. This approach supports their continental growth ambitions and helps overcome local market limitations in funding and risk management.

Three Nigerian banks - Access Bank, Guaranty Bank, and United Bank for Africa - completed capital-raising exercises in London last year. Other Nigerian banks, such as Oceanic, Bank PHB, Diamond Bank, Sky Bank, and First City Monument Bank, have expressed interest in setting up shop in the UK. Access Bank, Intercontinental, and GTB followed Zenith Bank in opening UK subsidiaries within months.

UBN's UK subsidiary has a staff of five overseeing trade finance, while FBN Bank (UK) has 10 staff in Lagos. UBA set up a UK subsidiary, UBA Capital, last November. Intercontinental Bank (UK) was established in London in September 2019.

The gas industry in Nigeria is considered a sleeping giant due to the flaring off of gas during oil production. UBN's parent bank has operations in Cameroon, Benin, Ghana, and West Africa. Trade finance is a central focus for Nigerian banks in the UK.

FBN Bank (UK) has been negotiating with Ecobank Transnational for a potential merger, which would result in representation in 16 African countries. Access Bank has set up a full service banking subsidiary in the UK, bringing the total number of their offshore subsidiaries to seven since 2006. UBN's UK subsidiary has a representative office in Lagos and a sub office in Abuja. Intercontinental Bank's operations department in London handles a significant volume of business for letter of credit (LC) collection.

In summary, the strategic expansion of Nigerian banks into the UK is a response to stricter capital requirements, a need for broader investor bases, improved access to long-term and risk-mitigated financing structures, and the strategic positioning within a global trade finance ecosystem centered in London. This approach supports their continental growth ambitions and helps overcome local market limitations in funding and risk management.

1. Nigerian banks are moving towards credit insurance by listing on the London Stock Exchange, such as GTBank (GTCO), aiming to raise capital for complying with higher capital requirements imposed by the Central Bank of Nigeria.
2. Banks like FBN Bank (UK) are innovating in lifestyle and personal-finance by focusing on Francophone Africa, establishing branches in Paris and setting up hubs in London to fill gaps left by international banks and local competitors.
3. The UK subsidiaries of Nigerian banks, like UBA Capital, are involved in technology by handling a significant volume of business for letter of credit (LC) collection, facilitating smoother transactions and relationship management in trade finance.
4. In the realm of education and self-development, banks like FBN Bank (UK) are considering mergers, such as negotiating with Ecobank Transnational for representation in 16 African countries.
5. Beyond the general news of banking expansions, there's also the sports-related angle, as the gas industry in Nigeria, considered a sleeping giant, may offer potential opportunities for investments and trade finance projects.

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