Union Bank Gets SEC’s Approval for N50bn Rights Issue

Goddy Egene

Union Bank of Nigeria Plc has received approval from the Securities and Exchange Commission (SEC) to go ahead with its Rights Issue of 12.1 billion ordinary shares of 50 kobo each at N4.10 per share to existing shareholders. The rights issue will enable the bank to raise Tier 1 capital of about N50 billion.

Shareholders of the bank had already given their nod to the issue and with the approval of the regulators, the issue is set to open for subscription this month (September).

Commenting on the SEC’s approval, Chief Executive Officer of Union Bank, Mr. Emeka Emuwa said: “The approval of the SEC brings us to the final stages of this important transaction for Union Bank which is critical to our short to medium term business objectives. The capital raised from the rights issue will support our strategy to accelerate business growth and position Union Bank as a leading commercial bank in Nigeria.”

According to the bank, Chapel Hill Advisory Partners Limited is lead issuing house, while FSDH Merchant Bank Limited and Stanbic IBTC Capital Limited are joint issuing houses.

Market operators said the fund would boost Union Bank’s performance and deliver good returns to shareholders going forward. Already, the bank has recorded improved results for the half year(H1) ended June 30, 2017.

Union Bank recorded gross earnings of N73.7 billion, showing a growth of 23 per cent from N60 billion in the corresponding period of 2016. Interest income was boosted by naira devaluation-fueled foreign currency loan book to hit N58.3 billion, up from N44.3 billion. Customer deposits rose 15 per cent due to growing confidence in the bank to hit N759 billion as at June 30, up from N658 billion as December 31, 2016. Impairment charge fell by 39 per cent from N8.8 billion to N5.4 billion.

Profit before tax stood at N9.5 billion, showing a growth of seven per cent compared with N8.9 billion in 2016, while profit after tax rose by five per cent from N8.8 billion to N9.2 billion.

“As our centenary celebrations continue and with the launch of ourN50 billion rights issue in the second half of the year, 2017 will remain a very busy year for the bank. With our clear focus on enhancing the operational efficiency of the franchise. In a challenged economy, the group delivered PBT of N9.5 billion, a six growth over the corresponding period in 2016,” Emuwa had explained.