UBN Gets Shareholders Approval To Raise N122Bn Capital

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From Benjamin a ameh, Lagos

Shareholders on Tuesday, approved plans of the Union Bank of Nigeria Plc (UBN) to raise N121.5Million (at exchange rate of N162 per USD) value $750 Million medium- term fund.

The approval came during the UBN’s 45th Annual General Meeting (AGM) held in Lagos Nigeria.

Furthermore, the shareholders authorised the management and board of directors of the bank to take all necessary steps to raise medium term fund by the issuance of debt instrument(s), tenured bond(s), and or tier II securities or a combination of all the options.

Chairman of the bank, Udoma Udo Udoma said, this $750 million medium-term debt instrument is use to fund huge lending to the oil, telecoms and power sector; especially now that Nigeria has privatised its power sector to boost its economy.

Udoma disclosed that ‘’In December 2013, the Bank finalised its three (3) year strategy, which provides a clear direction for future growth, in line with the ongoing transformation program. Union Bank aspires to be a highly respected provider of quality banking services, and to achieve this, the bank has identified six (6) core areas which is pivotal to its success-the quality of customer experience, the quality of our client base, the quality of our talent, the quality of our banking platform, our professional standards, and the quality of our earnings.’’

On his own part, Emeka Emuwa, Group Managing Director (GMD) of the Bank said the first priority is to improve efficiency by addressing operational challenges and implementing cost optimisation initiatives while the second priority will be to develop a medium term strategy which clearly outlines a roadmap to realising the bank’s ambition to be a highly respected provider of quality banking services, he added.

Another resolution, the shareholders of the bank approved include takings all necessary steps to cancel the 37,161,140 ordinary shares of 50 kobo each of its issued and fully paid shares, being shares held by the company following the acquisition of Union Merchant Bank Limited in 2005 and subsequently reconstructed and re-allotted pro-rata in 2011.

The investors of the bank also endorsed to set aside subject to regulatory approval up to 570,693,750 ordinary shares from the company unissued ordinary shares, a portion representing three percent (3%) of the bank’s authorised share capital of 19,023,125,000 ordinary shares to fund an employee share incentive scheme.

The shareholders also approved that the directors of the bank in pursuant to sections 106 and 107 of the companies and allied matters act 2004 (CAMA) take all necessary steps regulatory or otherwise to reduce the balance on the bank’s share premium account by N286 billion which should be applied to the negative retained earnings of N272 billion as at December 31, 2013 for the purpose of reducing it to zero.

Apart from the above, out of the N286 billion, shareholders authorised its directors, the sum of N14.918 billion should be used to facilitate the Asset Management Corporation of Nigeria’s (AMCON’s) claw-back of excess capital which arose as a result of the injection of the financial accommodation amount of N305.7 billion

Meanwhile shareholders of the bank unanimously agreed that it was high time the bank declared dividend to them in order to reap from their investments in Union Bank.

In his reaction to above issues at the venue: Bayo Adeleke, a, shareholder and Secretary, Independent Shareholders Association of Nigeria (ISAN), said it’s a welcome idea that the bank is seeking to raise $750 million fresh capital to enable it compete effectively with its peers in the industry.

Adeleke pointed out on the issue of the recapitalisation, the bank is a going concern, if you look at the level of Union Bank compared to some of the so-called new generation banks, Union Bank is not suppose to be where it is right now. So, for the bank to compete effectively, there is need to recapitalise, inject more money, build more branches embark on rebranding to boost customers confidence. They should also engage in aggressive marketing or whatever it will take to launch them back into the main stream of banking and for them to compete effectively.

Meanwhile, the financial performance of the bank for the year under review showed an audited report of the Profit After Tax (PAT) climbed 223 percent to N3.836 billion from N1.187 billion in the same period of 2012, Profit Before Tax (PBT) also rose 31 percent to N3.769 billion in the review period of 2013 from N2.872 billion in the corresponding period of 2012.

Also, the gross earnings increased slightly four percent (4%) to N121.399 billion from N117.212 billion in the same period of 2012.

 


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