By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Shareholders of Union Bank of Nigeria Plc (UBN) on Tuesday endorsed plans by the bank to raise $750 million medium- term fund.
The approval came at the lenders 45th annual general meeting (AGM) held in Lagos Nigeria.
As part of special resolutions at the AGM, the board of directors (BODs) of the bank are now authorised 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.
Udoma Udo Udoma, chairman of the bank said the $750 million medium-term debt instrument is to fund huge lending to the oil, telecoms and power sector; especially now that Nigeria has privatised its power sector to boost its economy.
‘’in December 2013, Union Bank finalised its three (3) year strategy, which provides a clear direction for our 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,’’ Udoma said.
On his part, Emeka Emuwa, group managing director (GMD) of Nigeria’s Union Bank said the bank’s first priority was to improve efficiency by addressing operational challenges and implementing cost optimisation initiatives.
According to him, the second priority was 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.
Bayo Adeleke, 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.
‘’On the issue of the recapitalisation, the bank is a growing 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,’’ Adeleke said.
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 that 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.
Speaking on the need for dividend payment, Shola Aboderin, president, Ibadan zone shareholders association, urged the bank to implement strategic plans that would leverage returns on investments for retail investors in 2014.
Aboderin said the shareholders had waited for so long a time for Union Bank to pay dividend and needed to be compensated adequately.
A review of the 2013 audited report of the bank shows that 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.
However, gross earnings increased slightly four percent (4%) to N121.399 billion from N117.212 billion in the same period of 2012.
