-our Bank is valuable: GMD

 

“Unity Bank Plc emerged from the largest merger and consolidation in the history of the Nigerian Banking industry.

 

The Bank came into being in January 2006 as a result of merger of nine financial institutions with about 209 branches and competencies investment, corporate and retail banking.

We are one of the Nigerian leading retail bank with 222 business offices spread across the country making us Nigeria’s 6^th largest bank by business locations”

 

(Source: Presentation by Group Managing Director of Unity Bank Plc)

 

In a Question and Answer (Q & A ) session at the Facts behind the Offer- Rights Issue of 23,928,142,026 of Unity Bank Plc (unity bank) captured today  on  the Floor of the Nigerian Stock Exchange (NSE) by PETER OBIORA of investadvocate in Lagos Nigeria, Falalu Bello ,Group Managing Director (GMD) of the Bank,  discusses issues on  and the ongoing  Rights Issue of the Bank, the half yearly accounts declared for the period ended June 2010, the seeking of strategic investors for the bank and reasons why investors should take advantage of the ongoing tradable Rights of Unity Bank.

Other issues discussed include, debt recovery, payment of dividend to investors at the end of the 2010 Financial Year, offer utilisation and the values inherent in the Bank amongst other things. Excerpts:

 

 

 

 

Why should shareholders take advantage of Unity Bank’s current Rights Issue?

 

They should take advantage of the offer because there is a hidden value in Unity Bank. We have just published our mid-year accounts; we have a Profit before Tax (PBT) of N7.4 billion. It is certain that any bank that can achieve this type of feat should close the year with a minimum of N10.0 billion and we can do more than that.

 

EDITOR’s PICK:

 

“From the financial Statement made available by Unity Bank at the “Facts behind the Offer-Rights Issue” Gross Earnings of the Bank rose from N20.593.88 billion in year 2009 to N26.644.52 billion in the review period, indicating a rise of 29%.

 

While Profit before Tax (PBT) also increased from –N9.966.63 billion in year 2009 to N7.367.79 billion in year 2010 representing an increase of 174%”

 

This is so; because the bank is working and running profitably. Unity Bank have some hidden value as an institution, part of the reason we made the profit was because we sold some assets that we do not require in our banking operations and in the process, we made some Capital gains; this is real and there are so many such things that we can do. Like I affirmed earlier, there are hidden values in this bank.

 

As for our Rights Issue, for the price of N1.00 per share, it is an excellent buy. Personally as a Shareholder, I have already paid for my Rights; because I believe in the institution.

 

Tradability of the Unity Bank’s Rights

 

In the event of Shareholders of Unity Bank not taken up their Rights, let me confirm that the Rights are tradable.  For the records and the structure we put in place, when you are dealing with the Government, you face some difficulties. They are sovereign and powerful, they can refuse whatever you are saying, and we went through a process and convinced all the 24 of them which includes the 19 Northern States, Lagos, Edo, Delta and Ondo States on the need for them to renounce their Rights in the Bank and encourage their indigenes to take it. At the end of it, all they want is a vibrant bank

We all know that whatever belongs to everybody belongs to the Government. Thus, the whole concept of separating investments and somebody who would buy; I would not mention names, there are two of the biggest banks in Nigeria, one has succeeded, and the other is almost failing. For the fact that there is a strategic Group that has a certain stake in a Bank; does not mean that other shareholders don’t have the right to speak.

 

Second, there is nothing wrong with a Group that holds substantial amount of investment in a Bank and wants things to be done properly; in the whole world, I do not think there is anything wrong with that.

 

In Unity Bank, we are not looking at individuals coming in to buy 40 percent (40%) at this particular point in time, we are looking at Institutional Shareholders and it is not going to be one person coming to takeover everything, Unity Bank is seeking strategic investors; preferably institutions who would come to add value to what we are doing. In this process, we have convinced the State Governments to renounce and they have all done that; which was the reason I affirmed that our public sector shareholding would come down from 70 percent (70%) to 25 percent (25%).

 

Certainly, at the end of it, if people from my state Kaduna do not buy, there is no reason somebody from Anambra State cannot buy, I am sure there would be enough shares to buy. Of the 23.0 billion, about 14.0 billion or 16.0 billion is public sector shareholding. The shares are available for anybody who wants to buy, just go to your Stockbroker and they would handle it. The Rights are there and are tradable.

 

We have already engaged almost all the States Government, for instance yesterday (July 19 2010), I was in Jigawa State and I went there to discuss with the Governor of the State on how they would make sure that their people buy the Unity Bank Rights Issue. Even if we speak with them, at the end of it investors are required to make funds available to buy the offer.

 

Utilisation of offer proceeds

 

We want to open more branches, upgrade our Information Technology (IT), recruit more staff and have working Capital. These are the areas the proceeds of the offer would be deployed.

 

Unity Bank and promise to pay dividend in year 2010

 

I said that paying dividend in the review period is subject to one thing that is if the existing law on goodwill is amended, I am aware that the Central Bank of Nigeria (CBN) is trying to amend the Banks and other Financial Institutions Act (BOFIA) portion of that to allow for the payment of dividend; even when you have goodwill in your books. The reason is simple; the Nigerian Accounting Standard Board (NASB) states that you can keep goodwill in your books, so long as it is not repaid by losses. Thus, if this happens, we would pay good dividends to our investors in year 2010.  However, without unforeseen circumstances, if Unity Bank maintains this level of profitability, we will pay well.

 

Institutional investors and Unity Bank

 

What is important at this juncture is a proper briefing of the Nigerian Investors; because of where we are coming from and the process so far. Again, I will like to affirm that we are doing well and making profits. However, the important thing is that how do we intend to run this institution? In this context, we are looking at strategic investors; because we want people who believe in the Bank and are prepared to stay as long as possible with it. Those individuals that can drive the process of Unity Bank, we are looking at Institutional Investors or a group of individuals.

 

We are talking with a Nigerian Group, young men who are professionals and they have already opened an account and commenced the deposition of funds in that account. Also we are already talking with two foreign Banks (names withheld) and when we conclude and agree that they would come in, we would then now meet and negotiate.

 

Just about two weeks ago the Governor of Central Bank of Iran was in my office, he confirmed that there are some Iranian Banks that are willing to come to Nigeria to invest in Nigerian Banks. If they come and we reach an agreement, then we are free to take them in as investors of the Bank. What we want are people that will come into the Bank and add value to our operations; so that the Bank can be properly run. All Shareholders would be interested in good returns on their investments; this is our ultimate objective.

 

Debt Recovery

 

As Unity Bank, we recovered in the last six months quite a substantial amount from all our debtors. We inherited about N46 billion from the nine Banks that formed Unity Bank and we may have a balance in the region of N30 billion in the review period, this exercise is a continuous process. The quantum is increasing and I was happy yesterday (July 19 2010) when Goodluck Jonathan, the President of the Federal Republic of Nigeria (FRN) signed the Asset Management Corporation of Nigeria (AMCON) bill. AMCON will come to takeaway a chunk of these toxic assets out of our books and we will move forward from there; knowing that it will improve our liquidity and profitability. For the Shareholders, that would translate to more dividend payout.

 

FACTS CHECK:

 

“President Goodluck Jonathan today, Monday, July 19, 2010 at exactly 3.28 pm signed the Asset Management Corporation of Nigeria, (AMCON) Bill into law.

The Act provides the legal backing for the establishment of the long-awaited corporation.

 

AMCON will help to stimulate the recovery of the financial system and ultimately the wider economy through among others, providing liquidity to the banks by buying their non-performing loans, recapitalizing the intervened banks, increasing access to refinancing opportunities for borrowers, increasing confidence in banks’balance sheets and therefore Nigeria’s credit and risk ratings, encourage a return of confidence to the capital market and preventing continued job losses in the banking industry”

 

End