Bloomberg News

Union Bank Nigeria Falls to Lowest in 3 Weeks: Lagos Mover

May 18, 2012

Union Bank Nigeria Plc (UBN), one of eight lenders bailed out by the central bank three years ago, fell to the lowest in almost three weeks after the lender pulled its share sale.

The stock slid 4.9 percent to 4.09 naira at the close in Lagos, the commercial capital, the lowest since April 30.

Union Bank halted the sale of 1.4 billion shares after the 15.25 percent subscription fell below the regulatory requirements, the Lagos-based lender said today in a notice published in Lagos-based BusinessDay newspaper. Investors will be refunded at 3 percent interest rate before May 31 as directed by the Securities and Exchange Commission, it said.

Union Bank planned to raise 10 billion naira ($63 million) from the sale to existing shareholders at 6.81 naira per share to help meet stipulated capital requirements, the lender said Dec. 14. A group led by African Capital Alliance invested $750 million into the bank, while the Asset Management Corp. of Nigeria, or Amcon, set up by the government to buy bad loans from banks is also invested in the lender.

“This takes them back to the drawing board and they have to decide which way forward,” Eugene Ezenwa, chief operating officer of PAC Securities Limited, a Lagos-based brokerage, said by phone today. “It will affect the share price because it means either that the board and management are weak or the existing shareholders lack confidence in the organization.”

The central bank of Africa’s biggest oil producer fired the chief executive officers of eight of the nation’s 24 lenders in 2009 after a debt crisis threatened the banking industry with collapse. It bailed out eight lenders with 620 billion naira and Amcon was set up to buy the bad debts, allowing banks to resume lending and rebuilding their balance sheets.

To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net


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