-To raise fresh capital via Rights Issue

By Peter OBIORA investadvocate

Oct 12 2010 18.29 GMT

Lagos (investadvocate)-Nigerian’s Union Bank Stakeholders has urged it’s Board on the speedy recapitalisation of the Bank. This was contained in a Statement Tuesday 12 October 2010 signed by Francis Barde, Principlal Manager, Corporate Affairs of Union Bank of Nigeria Plc (UBN) and made available to investadvocate in Lagos Nigeria.

This is coming on the heels of a Stakeholders forum of the Bank held recently at the Orient Hotel in Lagos Nigeria.

“The Board and stakeholders of Nigeria’s Union Bank have agreed to vigorously pursue the recapitalisation of the bank in order to restore it to its pristine position in the banking industry” the Statement affirmed.

The Bank further said in the Statement that it’s Board and Management should take all necessary steps to fast track the recapitalisation exercise of the bank by strategically combining the Asset Management Corporation of Nigeria’s (AMCON’s) option, core-investor and shareholders’ Rights Issue in order to raise the capital needed to enable it function optimally.

“In their submission, the stakeholders opined that the core investor should be an investor which had been existed for years with known financial pedigree and global clout that will give Union Bank leverage in the industry” it said.

The Statement also affirmed that there were suggestions that the Board and management should involve credible shareholders with substantial holdings to be part of the engagement processes with interested investors.

Musa Yakubu, Chairman of the Board of the Bank noted that the Central Bank of Nigeria’s (CBN’s) intervention in the bank was based on poor corporate governance, high level of non-performing loans, capital inadequacy and liquidity issues. 

“However, with its forbearance, Union Bank had remained surefooted to address these challenges with the support and understanding of its stakeholders particularly customers” Yakubu said.

In the same vein, Funke Osibodu, the Group Managing Director/Chief Executive Officer (GMD/CEO) of the Bank took the stakeholders through multitude of issues which bordered on several regulatory infractions relating to violation of prudential guidelines, poor financial control and accounting, suppression of expenses, unreconciled items, poor corporate governance, prevalence on non performing loans, etc.

 
Osibodu in the Statement affirmed that with the determination to restore the Bank to reckoning, its Management focused on the strong and positive brand attributes of the Bank to rekindle stakeholders’ confidence. 

“The bank was being repositioned in all its operations to ensure excellent customers services, through redeployment of key and Seniour Managers to be market facing. Additional staff is being recruited with training to be done largely through an e-learning platform. All staff are to be performance driven” the GMD said.

She further noted that physical infrastructure of the bank is being upgraded in branches; with some designated as flagship branches, as well as optimally utilising its Information Technology (IT) infrastructure to achieve not only group synergy  but to enjoy  the benefits of Bank’s flexclube software.

 

The Statement said that the stakeholders of the Bank has pledged their support to the actions of Nigerian’s Central Bank, and the various initiatives by the Board and Management of the bank to bring it back to profitability; while requesting it to speed up the recapitalisation process.

The Stakeholders present at the forum include major shareholders of the Bank, Staff, Pensioners, and some Shareholders Association Leaders. Others are customers of the Bank, opinion leaders and Captains of industries.

As earlier reported, Nigeria’s Central Bank August year 2009 sacked Chief Executive Officers (CEOs) of five Nigerian Bank which include Barth Ebong, former GMD of Union Bank.

The reason for this action, Lamido Sanusi, the Governor of the CBN affirmed was to safeguard Nigeria’s financial sector from systemic collapse.

“Some of these Banks are quite large institutions and they have been mismanaged, so we had to move in to send a strong signal that such recklessness on the part of Bank Executives will no longer be tolerated.” he said.