E-Financial
Fitch Cautions Against Regulatory Actions on Union Bank Not to Trigger Downgrade Rating
Rating agency, Fitch Ratings, has said that increased regulatory actions or funding instability may lead to a downgrade rating for Union Bank of Nigeria.
In its latest rating of the bank, it placed Union Bank’s ratings on a ‘Rating Watch Negative’, a significant move that highlights the bank’s current challenges following an intervention by the Central Bank of Nigeria (CBN).
Specifically, the bank’s Issuer Default Ratings (IDRs), Viability Rating (VR), and National Ratings are under the microscope for a possible downgrade. However, UBN’s Government Support Rating of ‘no support’ is not affected by this latest rating action.
Hinting at a possible downgrade in the coming months, it said: “A downgrade (and potential resolution of the RWN) could result from further regulatory intervention, e.g. imposition of restrictive measures on UBN’s activities, fines or other regulatory findings (such as weaker asset quality than initially reported by UBN), that would lead to large losses and erosion of the bank’s capital.
“The downgrade could also result from UBN’s funding instability, i.e. due to a deposit run or where additional liquidity sources become unavailable to the bank.”
It, however, noted that a downgrade can be avoided if there are no further regulatory interventions or financial profile implications under the new management of the bank.
A negative watch signifies that the agency has observed one or more conditions that could lead to a downgrade of the bank’s credit rating soon.
Justifying the negative watch rating, the agency said: “The RWN follows the Central Bank of Nigeria’s (CBN) announcement on 10 January that it had dissolved the board and management of three Nigerian banks, including UBN, as a result of regulatory non-compliance, corporate governance failure, disregarding the conditions under which banking licenses were granted and involvement in activities that pose a threat to financial stability, among other infractions.
“The CBN has since appointed new executives, including chief executive officers, to oversee the affairs of the banks.
“The RWN reflects the uncertainty surrounding the background to the CBN’s intervention, the potential for further regulatory actions and the negative implications for UBN’s standalone credit profile, particularly relating to corporate governance risks and liquidity pressures arising from potential funding instability.
“Fitch expects to resolve the RWN within six months once there is more certainty regarding the CBN’s intervention and the implications for UBN’s standalone credit profile.”
The Development Bank of Nigeria (DBN) has received shareholders’ approval to invest $2.5 million or 25% equity stake in the proposed Youth Entrepreneurship Investment Bank (YIB) — a new investment vehicle designed to provide equity funding to youth-led businesses in Nigeria.
The approval came during the bank’s 8th Annual General Meeting (AGM) which was held in Abuja.
The move is a strategic step aligned with the bank’s broader mission to support Micro Small and Medium Enterprises (MSMEs), job creation and entrepreneurship among Nigeria’s youth.
According to Tony Okpanachi, DBN Managing Director, Youth Entrepreneurship Investment (YIB) is not a conventional bank. It is an investment vehicle that will deploy equity into promising youth-owned enterprises.
“This is about backing ideas and unlocking growth through long-term capital — not debt,” Okpanachi told journalists after the AGM.
The initiative is a partnership between DBN, the Nigeria Sovereign Investment Authority (NSIA), and the African Development Bank (AfDB), with additional backing expected from development finance institutions.
The African Development Bank (AfDB) is currently in discussion to provide debt financing, which would bolster the capital available to the vehicle without diluting equity.
“This $2.5 million is DBN’s initial stake,” Okpanachi said. “We are co-investing alongside NSIA, and this sets the stage for broader institutional participation — both local and global.”
YIB aims to fill a critical funding gap in Nigeria’s startup ecosystem. While the country has a vibrant pool of young entrepreneurs, access to early-stage funding remains limited. Many businesses rely on short-term loans or informal capital, which often constrains scalability and long-term planning.
Okpanachi emphasised that YIB’s structure is deliberately designed to avoid the trappings of a traditional bank.
“This is not a commercial bank. It won’t provide loans or open retail accounts. It’s structured purely as an equity-focused investment vehicle, targeting scalable ventures with strong fundamentals and youth ownership”, he noted.
This will be DBN’s second strategic investment following the establishment of its wholly owned impact credit guarantee subsidiary, which offers partial credit guarantees to MSMEs.
Final structuring of YIB is underway. Following the shareholder greenlight, the promoters are now coordinating with the relevant stakeholders to complete incorporation, legal frameworks, and capital mobilisation.
“We expect all groundwork to be finalised by the end of this year. With operations likely to begin by early 2026,” Okpanachi disclosed.
The move comes amid growing concerns over Nigeria’s rising youth unemployment rate.
By investing directly into youth-led businesses, DBN and its partners aim to accelerate job creation, promote innovation, and catalyse broader economic development.
“There’s already strong interest from global players,” the MD noted, though he declined to name institutions due to ongoing negotiations.
“What we are doing is laying the foundation. YIB will serve as a credible, well-structured platform to crowd in institutional capital and scale youth-driven entrepreneurship.”
He added that YIB is not a one-off initiative but part of a long-term strategy to create sustainable investment channels focused on Nigeria’s demographic dividend.
“This is more than a financial transaction,” Okpanachi said. “It is a statement of intent. We believe in the entrepreneurial potential of Nigerian youth — and we are backing that belief with real capital.”
The Central Bank of Nigeria (CBN) has slammed a ₦250 million fine on Paystack for operating Zap, its peer-to-peer payment app, as a wallet in breach of its regulatory approval.
The apex bank flagged Zap as a deposit-taking product, a function reserved exclusively for institutions with microfinance or banking licences, according to a report by TechCabal.
Launched in March, Zap allows users to send and receive money, positioning itself as a consumer-facing digital wallet.
However, Paystack only holds a switching and processing licence, which permits it to facilitate transactions but not to hold customer funds. This regulatory limitation is at the heart of the CBN’s sanction, sources familiar with the matter said.
“Paystack is working closely with the regulator as they further review Zap, and out of respect for the process, we won’t be making any public comments at this time,” a company spokesperson said.
The penalty comes amid a legal dispute between Paystack and Zap Africa, a Nigerian crypto startup, which has accused the fintech of trademark infringement.
In Nigeria’s highly regulated financial services space, digital wallets are considered deposit-taking entities, and offering such services without the requisite licence raises compliance concerns for the regulator.
Although Zap reportedly does not directly hold customer funds, it operates in partnership with Titan Trust Bank, which is authorised to accept deposits.
This is Paystack’s most significant publicly disclosed regulatory sanction since it received CBN approval in 2016. It reveals the growing scrutiny facing fintech firms as they transition from enterprise-focused offerings to consumer-facing financial services.
Guaranty Trust Bank (GTBank) has announced an increase in its SMS transaction alert fee from ₦4 to ₦6 per message, effective May 1, 2025. The bank cited a recent rise in telecommunication tariffs by service providers as the reason for the adjustment.
In a message to customers, GTBank explained that SMS alerts sent to international phone numbers would attract higher charges due to varying telecom costs. The bank emphasized the importance of transaction alerts in helping customers monitor account activity
Customers who no longer wish to receive SMS alerts have the option to update their alert preferences by submitting a form available on the bank’s website via email. This move allows customers to manage their notification preferences according to their needs.
The fee increase affects GTBank customers, who will now be charged ₦6 per SMS alert for transactions
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