The Chief Executive of Union Bank, Emeka Emuwa said the bank plans to raise N50 billion in fresh capital via a rights issue by the end of the year to boost lending and hopes to win approval from the Securities and Exchange Commission for the plan this quarter.
The mid-tier lender has obtained the go ahead from the central bank after shareholders approved the capital increase to support growth and meet regulatory requirements.
Union Bank last week posted a 5.9 % rise in half-year pre-tax profit to N 9.46 billion.
Shares in Union, down 4.7% so far this year, rose 1.15% on Monday to N 5.30. They shed 20.3 % last year.
Emuwa told Reuters that Union Bank was targeting capital ratios of close to 20 % after the rights issue, from around 15 % now, adding that it has sufficient cover for its exposure to 9mobile, until the debt issue is resolved.
It would be recalled that lenders have agreed to extend a $1.2 billion loan which mobile operator 9mobile, formerly known as Etisalat Nigeria, took out four years ago but struggled to repay due to a currency crisis and a recession in Nigeria.
More specifically, N3.9 billion of this loan is owed to Union Bank Plc.
The Chief Executive, however, said on Monday that the bank has sufficient cover for it N 3.9 billion loan to telecoms group 9mobile. He added that the bank will focus on expanding lending to agricultural and real estate business.
According to him, Union Bank planned to grow its loan portfolio in the sectors that drive economic growth in Nigeria – food and housing.