Nigeria's Union Bank on Friday became the last lender rescued in a $4 billion 2009 bailout to get recapitalisation approval, bringing to a close a reform programme set-up two years ago to end the country's banking crisis.

Old generation lender Union Bank is the last of five rescued lenders to have concluded shareholders' meetings in order to approve deals with new investors.

Union said its shareholders approved a $750 million injection by a group of private equity investors led by African Capital Alliance who would own 60 percent of its equity.

Unlike Union Bank, the remaining four have voted to merge operations with healthy rivals, a process the lenders say will take 12 months to complete.

Rescued Intercontinental Bank will merge with Access Bank, Oceanic Bank will be recapitalise by Ecobank Transnational Inc (ETI) and merged with its Nigerian subsidiary Ecobank. Privately-held Equitorial Trust Bank will merge with healthy peer Sterling Bank

Finbank will merge with FCMB

We expect the conclusion of the M&A to result in seven banks dominating the banking sector over the medium term. These banks are expected to account for around 80 percent of the banking sector assets, 70.5 percent of the banking sector deposits and comprise 72 percent of the banking sector loans, analysts at Stanbic IBTC Bank said in a note to clients.

In our view, this should increase the strain on the mid-tier banks.

Mid-tier banks in Nigeria include Diamond Bank, Skye Bank and Fidelity Bank, all of which have growth ambitions, analysts say.

The shareholders' meetings were keenly watched.

Last month, central bank revoked the licenses of three other lenders for failing to show an ability to recapitalise ahead of the deadline, effectively nationalising Afribank, Spring Bank and Bank PHB.

Analysts said the take-over of the rescued lenders by healthy peers marks a new beginning for the industry amidst stiff competition and that central bank will now focus on policy and regulation.

Banking shares reacted positively to the news pushing the main index up 1.13 percent, its single biggest rise this month. The index of Nigeria's top ten bank rallied 2.05 percent.

Stanbic said it expected the mid-tier lenders to build-up scale by trying to acquire one of the nationalised banks in order to survive industry competition.

Wema Bank , the last of the nine rescued lender, has since scaled down operations to become a regional bank with lower capital requirement.