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Profitability, New Investors Bolster UBN Confidence

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Increased volatility in the volume and price of Union Bank of Nigeria (UBN) shares at the Nigerian Stock Exchange (NSE) is suggesting renewed investors’ confidence on the bank which has just emerged from years in the doldrums to profitability.

The share price has moved from N3.75 per share as at September to almost N8 per share at the close of business last Friday, an indication that core investor- led recapitalization of the bank is beginning to yield dividends.

As at close of business at the NSE last Friday investors staked N340 million for 445 million shares at N7.67 per shares exchanged between investors.

Market analysts said the upswing in the bank share is an indication of return to good health.

Nigeria CommunicationsWeek gathered that Union Bank was was recapitalized using the core investor- led process.

After stabilizing the bank, the bid to recapitalize the bank was thrown open, several foreign investors submitted bid for the bank.

There were due diligence on both the bank and the prospective investors. All stake holders, particularly shareholders, Pensioners and staff, were mobilized.

The management, after separating the chaff from the wheat, settled for African Capital Alliance Consortium.

Thereafter, Union Bank signed Transaction Implementation Agreement (TIA) with its potential core-investor, the African Capital Alliance Consortium (ACA Consortium) in furtherance to the Memorandum of Agreement (MOA) signed in March 2011.

The execution of the TIA represents a significant milestone in the recapitalization of the Bank ahead of the Central Bank of Nigeria’s deadline of September 30, 2011.

With this development, the Bank’s recapitalization process progressed and the ACA Consortium invested $750 million in the Bank consisting of $500 million equity and $250 million Tier II capital.

The full capitalization of the bank was achieved through the Asset Management Corporation of Nigeria’s (AMCON) investment of about N300 billion to bring net asset value to zero. 

This investment by the ACA Consortium, AMCON and existing shareholders restored Union Bank to capital adequacy and out of the woods in the Nigerian banking sector.

The bank was able to rebuild its customer service franchise and restore its infrastructure to compete again across diversified financial services.

The bank will also significantly focus on human capital development through staff training and development.

More specifically, African Capital Alliance (ACA), a leading private equity investment firm, investing in West Africa, led a consortium of international investment groups and development finance institutions to invest in Union Bank.

The ACA Consortium invested as Union Global Partners Limited, (UGPL) the controlling interests in Union bank, consists of African capital Alliance, ABC –Holdings; Standard Chartered Private Equity group; Corsair Capital Limited, comprising ACA managed funds; FMO Netherlands, and Richard Chandler Corporation.
 
Others are the Keffi Group VIII LLC based in New York, ABC Holdings Limited (Banc ABC Botswana), and Discovery Group (based in Connecticut USA).

Members of the Consortium have invested in financial services and several other sectors in various areas of the world, over the past twenty years.

The TIA was followed by court ordered Extra Ordinary General meeting and AGM 40 and 42 in Abuja. At the annual general meeting, shareholders approved the rights issue which began December 2011.

However, the rights issue did not meet the minimum standard of Nigerian Stock exchange and was cancelled. But Asset Management Corporation of Nigeria provided the money about N10billion which the rights issue was to provide.

The core investors has also taken over the share which was warehoused by AMCON.

At the end, recapitalization, the ownership structure of the bank is as follows; Core investors led by Union Global Partners limited has 65 per cent; Asset Management Corporation (AMCON ) 25 %per cent; while existing shareholders 15 per cent.

Nigeria CommunicationsWeek also gathered that  Union Bank of Nigeria had paid back the $800 million it was given by the Central Bank of Nigeria (CBN).

The cash injection, in the form of a seven-year, 6% note, was used to stabilize the bank following the debt crisis in 2009.

Management indicated the debt was repaid with interest, over a year ago.

Union Bank was one of the eight lenders bailed out in 2009 by the CBN following the financial crises.

In addition to the CBN cash injection, the Asset AMCON, a resolution vehicle, bought the bank’s nonperforming loans of banks and provided support in recapitalising the bank to encourage private sector interest in the bank.

AMCON currently holds a 20 per cent stake in Union Bank, while a consortium of private equity investors, led by African Capital Alliance, hold 65 per cent.

The remaining 15 per cent is held by existing shareholders. Post-intervention, the bank’s infrastructure and financial position has improved. As of 1H12, the posted PBT of N12.5 billion versus a loss of N61.6 billion same time last year.

This was driven by reduction in operating expenses and a huge reduction in loan loss impairments, reflecting the improved quality of the loan portfolio.

The NPL ratio was 5 per cent  (40 per cent  pre-intervention). Loan growth was flat, while deposits grew by 11%.
 


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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