Union Bank has downsized its business as it sold its United Kingdom subsidiary to MBU Capital Limited.
The London-based management investment firm acquired Union Bank UK after emerging as the most preferred bidder.
The Nigerian lender fully divested its stake at the Union Bank UK, which is about 60 million shares and 50,000 deferred shares. The finalisation of the acquisition is, however, subject to the approvals of regulatory bodies – the Central Banks of the two countries involved.
With the divestment of its shares in the Union Bank UK, the Nigerian lender will no longer have an international subsidiary. Surprisingly, the exit of Union Bank of Nigeria from the international market comes at a period its competitors are making inroad into foreign market to expand their footprint in global banking.
The downsizing of its lending business will enable the company pay needed attention to its Nigerian portfolio, which posted weak gross earnings recently. In a statement seen by Nairametrics, Union Bank said, “This sale is aligned with Union Bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria.”
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Speaking on the divestment, the Chief Executive Officer, Union Bank, Emeka Emuwa, said, “As the banking landscape shifts towards digital and agency banking to drive financial inclusion, the Nigerian market presents robust long-term opportunities for Union Bank. This divestment allows us channel our focus and capital towards mining those opportunities fully.
“Through the sale, we are better positioned to deliver greater value to the organization and its stakeholders as well as continue to build the future of banking in Nigeria. The terms of the sale of UBUK delivers substantial value to our shareholders, while also entrusting its customers and trading partners to a high-quality financial services institution who will work with existing management to deliver a stronger and more profitable entity.”
Meanwhile, the Founder and CEO of MBU Capital, Mohammed Iqbal, said, “We see a huge opportunity to build on UBUK’s strengths in international markets to create a new-style bank which is focused on the needs of UK and international SMEs and entrepreneurs. Many of these customers are seeking a bank which truly understands the needs of entrepreneurial, fast-growing businesses.
“We believe that our acquisition and vision for UBUK offers the potential for significant growth for the bank. We look forward to working with our new colleagues at UBUK to continue to service the needs of its clients. We also look forward to sustaining and deepening relationships with UBUK’s existing trading partners.”
The shares of Union Bank of Nigeria plummeted on the day of the announcement, falling for the first time after four trading days. The divestment might have affected investors’ confidence, which saw them dumping shares.
Union Bank’s share price fell to N5.90 kobo on Tuesday, after rising to N6.20 kobo on January 22 from N6.05 the previous day (January 21), maintaining the N6.20 for six days straight until Tuesday, January 28.
