Bloomberg News

Union Bank Nigeria Gets $750 Million for Recapitalization

July 13, 2011

(Updates with closing price in last paragraph)

July 13 (Bloomberg) -- Union Bank Nigeria Plc will receive $750 million in new capital after the country’s second-oldest bank signed an “implementation agreement” with a group led by private equity company African Capital Alliance.

“With this development, the bank’s recapitalization process is progressing,” the Lagos-based lender said in an e- mailed statement late yesterday. Additional funding to meet capital requirements will come from existing shareholders and the Asset Management Corp. of Nigeria, it said.

Union Bank is one of eight lenders bailed out by the central bank in 2009 with the injection of 620 billion naira ($4.1 billion) after a financial crisis that roiled Africa’s largest oil producer. The central bank fired eight lender chief executive officers, called for bids for stakes in the banks and has set a Sept. 30 deadline for their recapitalization.

“It is a mutually beneficial deal for both parties,” Ifeanyi Odunwa, managing director of Lagos-based Investment Centre Ltd., said by phone on the agreement by Union Bank. “African Capital Alliance will benefit from the depth of Union Bank’s business just as Union Bank needs the fund to jump-start its business and deliver higher returns on investment.”

Union Bank’s shares gained 2.2 percent, the most in a week, to 2.35 naira at the 2:30 p.m. end of trading in Lagos today.

--With assistance from Dulue Mbachu in Lagos. Editors: Linda Shen, John Kohut

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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