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By NBF News
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Shareholders of Union Bank Nigeria Plc have commended its Board of Directors for escaping the wrath of the Central Bank of Nigeria (CBN) over its plan to nationalize the bank.

Speaking to Vanguard, President of Advancement for Rights of Nigerian Shareholders, Dr. Farouk Umar, who spoke the mind of  other shareholders said, 'We are happy that our bank was not nationalized, half bread is better than nothing. If the Board had not gone for core investors, the bank would have been taken over by government through Nigeria Deposit Insurance Corporation (NDIC). So we thank God we have escaped nationalisation, and it is our hope that the core investor will pick the failed portion of the rights issue while we hold our 10 per cent stake.'

In his own reaction, Chairman of Progressive Shareholders Association of Nigeria (PSAN), Mr.Boniface Okezie, said, 'I had predicted that the right issue will be a failure because the minority investors were short changed.  The price it sold the rights was very high because we all know that Union Bank will not pay dividend in the nearest future. Even the right issue is not suppose to take place .

'I will like the issue of Union Bank to be revisited because the CBN and Asset Management Corporation of Nigeria (AMCON) took over the bank unjustly. I just believe that there was nothing wrong with Union Bank. Let a new auditor be invited to look into the financials of the bank.'

It should be noted that the failure of the rights issue is an indication that shareholders would get a refund of their money. The rights issue was supposed to fetch the bank N9.6 billion.

However, failure of the rights issue, according to the shareholders' does not in any way affect the bank's recapitalisation as the core investors have injected funds to take up 60 to 70 per cent of the bank's shares.

If the rights issue had been successful; the old shareholders' stake would have increased to about 20 per cent from 10 per cent. But the status quo (failed rights issue) has paved way for the core investors to take up the  unsubscribed portion of the rights issue that was supposed to be apportioned to the shareholders. The Bank as gathered currently has over N100billion shareholders' fund.

It will be recalled that the inability of the shareholders of the defunct Spring Bank (now Enterprise Bank), Afribank  (now Mainstreet ) and BankPHB (now Keystone) to agree to hand over their banks to new investors necessitated the nationalization of these institutions - making them to lose out entirely.

Before the new Securities and Exchange Commission (SEC) management came the threshold for a successful  private placement, public or right issue was 25 per cent but was moved up to 30 per cent.

It will be recalled also that the application list for the N10 billion rights issue by Union Bank of Nigeria (UBN) Plc closed on Friday, February 10, 2012.

Union Bank offered about 1.41 billion ordinary shares of 50 kobo each at N6.81 per share in the ratio of five new ordinary shares for every nine ordinary shares held as at the October 21, 2011. The application list had opened on December 14 and was initially scheduled to close on Friday January 20, 2012.