Union Bank to Boost Its Capital with N50 N50bn

Fri, Apr 7, 2017 | By publisher


Banking Briefs


UNION Bank Plc is to raise N50 billion ($164 million) by the end of the second quarter via a rights issue to boost its capital adequacy and tap opportunities to lend to agribusinesses.

Emeka Emuwa, chief executive officer, Union Bank, said on Thursday, April 6, that the bank targeted a capital ratio higher than 18 percent after the fund raising, compared to 13.4 percent as of the third quarter of 2016.

“We are en route to a capital raising,” Reuters quoted Emuwa to have told an analysts’ call. “We see opportunities to leverage our capital not just to be in regulatory compliance but to be able to tap opportunities that we see in the medium term.”

Emuwa said the total value of Union Bank’s loans rose 40 percent last year, but that was largely due to Nigeria’s currency devaluation which affected dollar loans to the upstream oil and gas sector. Without the devaluation loans grew 13 percent, he said.

Nigerian banks have had to change their business models to survive after previously lucrative loans to oil companies turned sour following the slump in crude prices, which pushed Africa’s biggest economy into recession.

Union Bank, which was acquired from the government by a consortium of private equity investors in 2011, is looking for opportunities as Nigeria tries to foster new industries and cut down on imports it can no longer afford. “We see opportunities in agro-business, food processing, fast-moving consumer goods,” Emuwa told the call.

“Anything that is aligned with how the economy is evolving, manufacturing of consumer goods, manufacturing of goods by replacing what is previously being imported are areas where we see opportunities.”

The bank will pursue opportunities as they present themselves, he said. Emuwa said the bank has N3.9 billion exposures to Etisalat Nigeria, the local arm of Abu Dhabi-listed telecoms firm Etisalat which has been discussing with 13 local lenders about renegotiating the terms of a $1.2 billion loan.

—  Apr 17, 2017 @ 01:00 GMT

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