Union Bank announces Central Bank’s approval of its divestment plans
The bank is going through a transformation process.
The Union Bank of Nigeria Plc, on Friday, announced that it had received the Central Bank of Nigeria’s approval to divest its interests in its portfolio companies.
The bank noted that this was in line with Central Bank’s directive that banks divest their core banking businesses from other subsidiaries.
Union Bank also formally informed the Nigerian Stock Exchange, of Central Bank’s approval.
The divestment complies with Central Bank’s ‘Regulation 3’ on the Scope of Banking Activities and Ancillary Matters which requests banks to operate as Commercial, Merchant or Specialised banks. The regulation, issued in 2010, annulled the Universal Banking Model, which allowed banks to provide a broad range of financial services through subsidiaries.
Union Bank would divest its interests in its non-banking and portfolio companies, with the exception of Union Bank (UK) Limited, and operate as an International Commercial Bank.
The Group Managing Director of the bank, Emeka Emuwa, said the bank’s fulfillment of its ‘Regulation 3’ obligation to the Central Bank was coming at a crucial time.
According to him, the bank recently embarked on a transformation programme to upgrade and enhance its performance. Several initiatives were kicked off under this programme, including investments in technology, upgrade of infrastructure, strategic recruitment and the review of processes to make them more efficient for customers.
“Union Bank is currently on a journey of transformation, to return it to its position as one of the leading banks in Nigeria. Our ambition today is to be reliable – to be an institution which delivers the best service possible to its customers and which consistently creates value for all its stakeholders. The bank has therefore decided, as one of the many steps to the achievement of its transformation goals, to focus its resources on core banking functions,” he said.
According to the Executive Director and Chief Risk Officer of the bank, Kandolo Kasongo, apart from helping to achieve the bank’s goal, the post-divestment structure would, in accordance with the objective of the Central Bank regulation, significantly reduce the overall risk profile of the bank, while increasing the protection of depositors’ funds.
“It is also expected that the divestment would release capital to the bank to further strengthen its balance sheet and enable Union Bank generate better returns to its various stakeholders,” he said.
It is expected that the divestment process would be carried out with due process with proper consideration given to the characteristics of each portfolio company. A number of banks have already divested their business structures. These include First Bank, Stanbic IBTC and GTB, among others.
The Central Bank approval allows Union Bank eighteen months to implement its compliance plan.
The bank said it would ensure that only investors who were able to strategically drive the future of the portfolio companies were engaged, but added that, pending the conclusion of the divestment, it remained committed to all its portfolio companies.
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