BFREE Plans $40m to Acquire Bad Loans from Union Bank

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By Modupe Gbadeyanka

A cutting-edge German-Nigerian financial technology (fintech) firm, BFREE, plans to put down $40 million to acquire some distressed loan portfolios in Union Bank of Nigeria.

A statement from the Nigerian lender said both parties signed a Memorandum of Understanding (MOU) in Berlin on November 21, 2023, at the German-Nigerian Business Forum.

It was disclosed that BFREE would partner with its international financing partners to refinance bad loans from Union Bank, particularly those delayed in repayment or already written off.

Union Bank expressed its optimism that this strategic partnership with BFREE would not only bolster the bank’s financial health but also contribute significantly to the broader economic recovery of Nigeria.

The financial institution, a leading provider of loans to Retail customers and Small and Medium Enterprises (SMEs) in Nigeria, has proactively adapted to the challenging economic environment.

The ongoing economic pressures have necessitated increased flexibility for loan repayment plans, and BFREE, leveraging artificial intelligence (AI), presents an innovative solution.

Its AI-driven automated interaction with loan customers facilitates discussions and agreements on revised loan terms. This streamlined approach enables the rapid review of many loan agreements within short periods, resulting in higher repayment rates and reduced instances of loan write-offs for Union Bank.

It also demonstrates the Bank’s confidence in BFREE’s robust recovery process. This strategic partnership not only positions Union Bank for enhanced financial resilience but also relieves the institution of the burden of managing low-performing loan portfolios.

President Tinubu’s active participation in promoting Nigeria as a prime destination for business and investment underscores the collaborative efforts to attract international businesses. The anticipated increase in foreign currency inflow, particularly USD and EUR, is expected to alleviate pressure on the exchange rate of the Naira, contributing to economic stability.

Speaking about the partnership, Mr Joe Mbulu, Executive Director of Union Bank, said, “We are excited about the strategic partnership with BFREE as it aligns with Union Bank’s commitment to innovation and adaptability.

“This collaboration signifies our dedication to finding innovative solutions to the economic challenges faced by our customers.

“By leveraging BFREE’s advanced AI capabilities, we aim to enhance the efficiency of our loan portfolio management, ensuring flexibility for our customers in these challenging times.

“This partnership reflects Union Bank’s proactive approach to navigating the evolving financial landscape and reinforces our commitment to providing sustainable financial solutions to individuals and businesses in Nigeria.”

Also commenting on the partnership, Julian Flosbach, Chief Executive Officer of BFREE, said, “BFREE is thrilled to announce our strategic partnership with Union Bank, a collaboration that underscores our joint commitment to innovation and resilience in the face of economic challenges.

“With a track record of successfully managing over 4 million distressed customers across Africa, BFREE brings extensive experience to the table. Our proprietary AI capabilities will play a crucial role in streamlining Union Bank’s loan portfolio management, offering unparalleled flexibility to customers during these challenging times.

“The commitment of our financing partners is instrumental in driving this initiative, highlighting their dedication to supporting Union Bank’s revitalisation efforts.”

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