Union Bank of Nigeria has announced the registration of a N100 billion Debt Issuance Program and the subsequent inaugural issuance of Series I and II Bonds under the newly registered Bond Program. At the conclusion of the Book Build, the N20 billion issuance was 165% subscribed.
The new funding is expected to support Union Bank’s loan book diversification efforts and provide further working capital.
Chief Executive Officer of Union Bank, Emeka Emuwa, noted that the inaugural issuance under the N100 billion bond program marks a milestone achievement in the bank’s bid to accelerate business growth and continue its commitment to re-establish the bank as one of Nigeria’s leading financial institutions.
Race to raise capital by Tier 2 banks
Tier two banks in the country continue to face a tougher time dealing with liquidity challenges, and several of them initiated plans to embark on a capital raise. Diamond bank, disposed of its non-essential assets to boost its capital base.
Recall that Atlas Mara, the Pan African banking vehicle set up by Bob Diamond, recently announced it had acquired an additional 1% stake in tier two lender, Union Bank. This amounts to 280,956,166 shares. The firm has progressively increased its stake in the lender since acquiring a 20% stake from the Asset Management Company of Nigeria (AMCON) in 2012.
The bank in its recently released H1 2018 results show the bank reported a 16% increase in Gross earnings of ₦83.33 billion for the period ended June 2018 compared to ₦72.06 billion reported for the period ended June 2017. Its Profit before tax also increased from ₦9.46 billion in H1 2017 to ₦11.66 billion for the period ended June 2018.
Its share price is currently trading at N5.30 on the floor of the Nigerian Stock Exchange. Its one year return is down by 13.11%.
Union Bank, founded in 1917, is one of Nigeria’s oldest commercial banks and was listed on the Nigerian Stock Exchange in 1971. The Asset Management Company of Nigeria (AMCON) injected N239 billion as capital into the bank in 2011.
