Sterling's Chief Strategist Yemi Odubiyi told Reuters the new shares would represent 20 percent of the enlarged bank after the merger is concluded.

He said existing shareholders of ETB and a state-owned asset management company will split the stake equally.

He did not provide information on the value of the new shares.

"Sterling is offering ETB and AMCON shareholders 20 percent of the enlarged entity post-merger. It's not a cash consideration deal. Sterling will issue new shares representing 20 percent of its outstanding shares," Odubiyi said.

Nigeria's central bank injected $4 billion into nine lenders in 2009, saving them from collapse, and has been seeking new investors to recapitalize them.

It set up asset management company AMCON last year to absorb non-performing loans from the rescued lenders in order to make them attractive for new investors.

Odubiyi said the mid-tier lender expects to almost double its customer base and branch network following the deal. Sterling has 97 branches, which it has been seeking to grow, he said.

"On completion of this transaction, the merged entity will have 185 branches, over N360 billion in deposits, and N550 billion in assets," Sterling said in a statement, giving the rationale for the transaction.

Sterling and ETB signed merger agreements in August and expect to convene shareholders' meeting on Sept. 28 to approve the deal.

Copyright Reuters, 2011

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