Union Bank Plc plans to sell non-banking units to comply with Central Bank of Nigeria regulations, Chief Executive Officer Emeka Emuwa said yesterday in Lagos.
“The divestment will see the sale of about nine units of the bank’s subsidiaries before the first quarter of 2015,” the CEO told reporters in his office at the bank headquarters.
Union Bank, one of eight banks bailed out by the central bank during a debt crisis in 2009, will sell insurance, property, share registry and trustee businesses to comply with the new rules. That will allow the bank to become a holding company operating local and international units.
The central bank has since 2009 enforced a new minimum capital requirements for banks to prevent a repeat of the crisis. It has also proposed a new banking model that requires banks to sell all non-core businesses. Under the central bank proposals, banks are also required to form a holding company if they intend to carry out insurance, asset management and capital market activities. Union Bank has found new investors to recapitalise it and was granted an extension to restructure its operations.
“We have till the end of February to conclude our divestment programme,” Union’s CEO Emeka Emuwa told a media conference, adding that the bank had nine subsidiaries, including insurance and capital market units. The regulator has said its primary objective is to ensure banks are effectively supervised and to ensure the safety of depositors’ funds by prohibiting them from speculative capital market activities.
“The restructuring will enable us focus on core banking and do more in our area of competitive advantage, which is commercial banking,” Emuwa said. Union Bank “has sufficient capital to fund it’s restructuring and expansion and will not be seeking further capital in the near to medium term,” he said.
The bank’s shares rose 0.1 per cent to N10.20 as of 2:30 p.m. in Lagos, bringing this year’s gain to 5.9 per cent. That compares with an 8.3 per cent decline in the Nigerian Stock Exchange All-Share Index.
Several other Nigeria banks have complied with the directive. GT Bank, UBA, and Diamond Bank all sold their subsidiaries while First Bank , FCMB and Stanbic IBTC, a unit of South Africa’s Standard Bank, have adopted the holding company model.
Union Bank said it will maintain its international banking operation in Britain and planned to use electronic channels to expand its retail banking business in Nigeria, Emuwa added.
