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COVID-19: Union Bank closes some branches, downgrades activities in FCT, Lagos, Ogun

Union Bank of Nigeria has shut down a number of its branches nationwide while maintaining skeletal activities in some others, and full operations in a few.

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Union Bank reports 33% growth in PBT for FY2019, Union bank releases FY 2019 financial result, records profit increase,Union bank releases FY 2019 financial result, records profit increase, COVID-19: UBN activates Flexiwork, COVID-19: Union Bank closes some branches, downgrades activities in FCT, Lagos, Ogun

Union Bank of Nigeria has shut a number of its branches nationwide while maintaining skeletal activities in some others, and full operations in a few.

In a message to its customers, the bank said, “Due to the impact of COVID-19, we are modifying how we serve you. Bank safely with Union mobile and cards.”  

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The modification will see most branches across the country shut with only the Automated Teller Machines operational, while some will stay open but only accept envelope deposits in order to prevent crowd in the banking halls. Only a few branches in major cities will still have full operations.

In Lagos State, where the lockdown is total, 11 branches including the head office at Marina, Herbert Macaulay Way Yaba, Oba Akran Avenue, Ikeja, 3rd Avenue Festac Town, Ikorodu, and Adeola-Odeku will remain fully operational while the branches at Tinubu Square and Western Avenue will keep the ATMs operational and receive envelope deposits only.

[READ MORE: COVID-19: Lagos state has recorded no deaths)

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A total of 38 branches, including the branches at Lawanson Surulere, Ogudu, Oshodi, Oregun, Agege, will only have the ATMs operations while the banking hall would be shut.

Union Bank's statement

The FCT will only have 3 branches fully operational: Kubwa, Wuse II and Abuja Municipal. The banking hall in other branches will be shut to walk-in customers, but the ATMs would be available for use.

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In Ogun State, where the lockdown is also effective, the branch at Onikolobo Road Abeokuta will be fully operational, while the branch at Ijoku, Sagamu will only receive envelope deposits with its ATMs available for use.

All other branches will only have ATMs functional for customers.

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READ MORE: COVID-19: Startups groan over losses, may shutdown in months

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During the presidential broadcast on Sunday evening, President Muhammadu Buhari had declared a total lockdown in the FCT, Lagos and Ogun states, exempting essential service providers including banks and financial institutions.

He, however, stated that these institutions and individuals are to maintain skeletal operations.

To view the full list of Union bank branches operational across Nigeria, click here.

Ruth Okwumbu has a MSc. and BSc. in Mass Communication from the University of Nigeria, Nsukka, and Delta state university respectively. Prior to her role as analyst at Nairametrics, she had a progressive six year writing career. As a Business Analyst with Narametrics, she focuses on profiles of top business executives, founders, startups and the drama surrounding their successes and challenges. You may contact her via ruth.okwumbu@nairametrics.ng

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Business News

IMF advises banks to suspend dividend payment

However, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income.

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IMF discloses immediate priority , Reduce funding oil subsidy - IMF to Nigeria , IMF: 40% of African countries can't pay back their debts , Nigeria among countries that pushed Global debt to $188 trillion - IMF , Coronavirus: World Bank, IMF to support Nigeria and other member countries affected, IMF, World Bank to hold meetings via conference call over Coronavirus epidemic, IMF advises banks to suspend dividend payment

In an article published on its website, International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, advised banks to halt dividend payment for now. According to her, with the expectation of a deep recession in 2020 and partial recovery in 2021, banks’ resilience will be tested. Therefore, having in place strong capital and liquidity positions to support fresh credit will be essential.

According to the article, one of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations which are not insignificant.

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IMF staff calculate that the 30 global systemically important banks distributed about US$250bn in dividends and share buybacks last year.

In a circular dated January 31, 2018, the Central Bank of Nigeria (CBN) stipulated new conditions for eligibility of Nigerian banks to pay dividend and the quantum of dividend to be paid out by banks who are eligible. Prior to the release of the circular, dividend payout policy for Nigerian banks had been spelt out in Section 16(1) of BOFIA 2004 (as amended) and Prudential Guidelines for DMBs of 2010. The circular provided guidelines and restrictions around divdidend payout for banks based on NPL ratio, CRR levels, and Capital Adequacy Ratio (CAR).

However, there were no regulatory restriction on dividend payout for banks that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than 5%. However, it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities. Indeed, current economic realities demand caution.

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Current economic realities mean that banks face asset quality threats, further devaluation threat which may impact capital in some cases, and lower profits which in turn affects the quantum of capital retained. Ideally, these should reflect in NPL ratio and CAR ratio and should immediately restrict banks’ ability to pay dividend. However, there is usually a time lag before these ratios begin to reflect the new economic realities. Therefore, IMF’s advise may come in handy for many banks.

(READ MORE: Software security limitations cited as major reason for Covid-19 bank rush)

That said, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income. Banks like Zenith and Guaranty Trust have a good history of consistent dividend payment with attractive yields which is a major attraction for many shareholders.

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IMF advises banks to suspend dividend payment

 

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CSL STOCKBROKERS LIMITED CSL Stockbrokers,

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Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State,

NIGERIA.

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Economy & Politics

BREAKING: CBN reduces MPR to 12.50%, holds other metrics

Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% and retains CRR at 27.5%, Liquidity ratio at 30%.

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The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50%.

Governor, CBN, Godwin Emefiele, disclosed this while reading the communique at the end of the MPC meeting on Thursday in Abuja.  Meanwhile, other parameters such as the Cash Reserve Ratio  (CRR) remained at 27.5%, Liquidity ratio at 30%.

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Details later …

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Economy & Politics

Just in: Buhari seeks approval from green chamber to borrow fresh $5.5billion

FG also seek approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

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President Muhammadu Buhari is seeking the approval of the House of Representatives to borrow fund to finance capital projects at the federal and state (to support state governors) levels in the 2020 budget.

This request was disclosed via the official twitter handle of the House of Representatives.

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The president’s letter, which indicated that the fund would be sourced locally and internationally, was read on the floor of the House of Representatives by the Speaker, Femi Gbajabiamila, during plenary on Thursday, May 28, 2020.

In the letter to the lower chamber, Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

Although the tweet did not contain the total amount of loan that is being requested, reports suggests that the President is seeking approval to borrow the sum of $5.513 billion from external sources to finance 2020 budget deficit and support state governments to meet challenges caused by the coronavirus pandemic.

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Details shortly…

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