In a notice sent to the Nigerian Stock Exchange, UBA announced the cancellation of 2,080,194, 955 shares held by staff under the Staff Share Investment Trust Scheme. According to the bank’s company Secretary Billi Odum, “the transfer of shares from the SSIST was part of a special resolution passed by shareholders at the bank’s Annual General Meeting held on April 8 2016”
This means that the total number of UBA shares will thus be reduced.
Who benefits from this move?
Staff of the bank may be in for a windfall, as the shares would be acquired by the bank in order to cancel them. Records from today’s trading session show the deal was executed as a cross transaction at N9.47 valuing the shares at over N20.8 billion. As at December 2016, the total number of shares held under the staff scheme amounted to 2, 231, 381, 417 or 6.02% of the total share capital of the bank. UBA has 36.2 billion shares in issue. Staff will still continue to retain a stake in the bank through the scheme as the 151 million shares will be left under the scheme after the cancellation. Though a company can not buy back its shares in Nigeria, it can however work its way around that by cancelling the shares after purchase.
Shareholders also benefit from the cancellation of shares. Earnings per share of the company will increase due to the smaller number of shares in issue. This may also lead to an increase in share price, as a higher earnings per share means the value placed on the shares by investors will go up. Figures from the bank show the bank had an Earnings Per Share of N2.04 in 2016. UBA shares closed at N8.80 at the end of today’s trading session on the NSE, and are up 95.50% year to date.