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CBN May Nationalise Ailing Unity Bank as Talks With Investors Fail

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nationalise ailing Unity Bank

By Dipo Olowookere

The Central Bank of Nigeria (CBN) may nationalise ailing Unity Bank Plc over its troubled and unhealthy state, in its bid to save depositors and shareholders’ funds.

This follows the apex bank’s target examination which shows that the lender is in grave financial condition with its capital adequacy ratio (CAR) and non-performing loans ratio (NPL) which breach its acceptable prudential standards.

This medium further gathered that the CBN has been hesitant to continue to inject funds into Unity Bank and, therefore, gave the bank a timeline to strengthen its financial base or face dire consequences.

The development, it was learnt, has been causing apprehension among depositors who have been rushing to draw up their money from the bank.

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The CBN had directed Unity Bank in 2017 to get investors to shore up its capital base but the lender has not been able to find suitable investors to save the financial institution from the sledgehammer of the apex bank.

Sources further disclosed that the bank in 2020, after many failed attempts, including the botched Milost $1 billion deal of 2018, allegedly secured a deal with an investor and funds were transferred to the CBN but the apex bank’s checks and due diligence on the investors did not clear them for the deal as the whole deal has been placed on hold.

The CBN, however, may have concluded plans to withdraw the lender’s license just as it did to the defunct Skye Bank Plc.

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Unity Bank has been struggling with retained negative earnings for more than six years. Other lenders, which were having similar challenges, have been able to turn the corner, but Unity Bank has continued to wallow in this quagmire.

Recall there were rumours recently that Mrs Tomi Somefun, Managing Director/CEO of the bank, was on the verge of being sacked by the board because of poor performance as she has not been able to get the company out of the doldrums, but the management quickly dismissed the reports.

With the new developments, sources disclosed that the CBN will intervene in the ailing Unity Bank Plc and the operating licence of the bank may be revoked to give way to a bridge bank to be created in consultation with the Nigerian Deposit Insurance Corporation (NDIC) to assume the ownership of the assets, all deposit liabilities and some other liabilities of the distressed lender.

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The CBN will, therefore, reconstitute the board of directors of the bank and shore up its capital base.

We reached out to Unity Bank for a reaction to this issue but as at press time, the lender did not comment on the matter raised in our enquiry.

At the stock market on Thursday, Unity Bank shares closed flat at 57 kobo per unit, with the volume of trade rising by 225,556 per cent to 109,628 units from 33,674 units of the previous session.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Banking

CBN’s Digital Currency Will Deepen Financial Inclusion—FDC

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Summon CBN Governor

By Adedapo Adesanya

Financial Derivatives Company (FDC) Limited has lauded the proposed plan by the Central Bank of Nigeria (CBN) to introduce a digital currency, saying it will deepen financial inclusion in the country.

In a new report, FDC explained that most central banks had indicated keen interests in developing their digital currencies in response to the threats and limitations of cryptocurrency, including poor regulation, price volatility and facilitating illicit financial transactions.

The report said, “Nigeria is set to follow the global trend as it plans to launch its digital currency by year-end. Unlike crypto, digital currencies are regulated by central banks, thus giving them some level of control over the financial system.

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“On a positive note, virtual currencies would facilitate smooth financial transactions and eliminate bottlenecks associated with the use of cash (mutilated notes, forgery, cash handling charges, shortages). It will also deepen financial inclusion and increase the velocity of circulation.”

The analysis highlighted the rising concerns of distrust in the government and its policies, cybersecurity and inadequate digital infrastructure.

“All these could limit the launch and widespread use of the digital currency in the country,” it said.

According to the report, the drop in inflation rate in May for the second straight month contradicts market reality following the report by the National Bureau of Statistics (NBS) which disclosed that the country’s inflation rate fell to 17.93 per cent in May from 18.12 per cent in April.

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FDC said contrary to analyst expectations, the decline in consumer price inflation seemed to be more of a trend than a blip.

It said the headline inflation fell again in May primarily due to a fall in the food sub-index to 22.28 per cent from 22.72 per cent in April.

This is coming as the CBN last year issued a circular asking commercial banks and other financial institutions to close accounts transacting in, or operating on, cryptocurrency exchanges.

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All deals involving cryptocurrency are now prohibited with severe regulatory sanctions awaiting erring outfits.

The apex bank also asked commercial banks to identify persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.

But since the apex bank announced its intention to introduce a digital currency for the country, it has been applauded.

Apart from the FDC, other analysts have submitted that the proposed CBN’s digital currency would benefit the nation, especially as the digital asset is becoming widely accepted across the globe.

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Banking

CIBN to Revamp Banking Practice in Nigeria With A-TEAM Initiative

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CIBN A-TEAM Initiative

By Aduragbemi Omiyale

A strategic initiative aimed to revamp banking practice in Nigeria has been introduced by the Chartered Institute of Bankers of Nigeria (CIBN).

The new plan with the acronym A-TEAM means Accelerated Development; Technology and Digital Enhancement; Engagement for Growth; Accountability and Transparent Leadership and Membership Drive for Value.

As part of efforts for its successful implementation, the CIBN is seeking collaborations with financial institutions in the country.

Recently, the President/Chairman of Council, CIBN, Mr Bayo Olugbemi, visited Ecobank Nigeria and he said the A-TEAM initiative will benefit stakeholders in the banking sector.

He applauded Ecobank’s consistent support for the institute over the years to ensure the realisation of its mandate of determining the standards of knowledge and skills development for those seeking to become members of the banking profession.

“We applaud Ecobank Academy as the first corporate member to become a member of the Global Business School Network and for the consistent support for the realisation of the institute’s mandate of determining the standards of knowledge and skills to be attained by persons seeking to become members of the banking profession.

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“We, therefore, seek Ecobank’s collaboration and enlistment in our Endowment/Prize Awards in any subject of interest; support towards the renovation of Abuja Bankers’ House; support for the establishment of banking museum by donating artefacts and other relevant materials; and to participate actively in training programmes of the institute,” Mr Olugbemi said.

Further, he congratulated Ecobank Nigeria and the Ecobank Group on winning several International awards, which includes the Best Retail Bank in Nigeria by Asian Banker; Africa’s Best Bank for Corporate Responsibility by Euromoney (Ecobank Group); African Bank of the Year (African Banker); Innovation in Financial Services Award from African Banker (Ecobank Group); EMEA Finance African Banking Awards 2020.

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Responding, the Managing Director of Ecobank Nigeria, Mr Patrick Akinwuntan, pledged more support and collaboration with the institute, restating that Ecobank will continue to contribute to the efforts of the organisation to become top class and remain relevant globally.

“For us at Ecobank, we are extremely proud CIBNs efforts at ensuring public discourse on the future of the Nigeria economy and the banking and finance industry.

“This is not in isolation of the ethics, professionalism, accountability, transparency, good corporate governance without losing focus of harnessing the opportunities technology has provided in the new world order. Be assured of our maximum support and collaboration at all times,” he said.

Mr Akinwuntan also identified with the efforts of the institute to raise the bar of competency and capacity building in the industry, stressing that with sound professional conduct, every banker will be held in high esteem.

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He said Ecobank was working assiduously to ensure a majority of its staff become members of the institute, adding that the bank will also provide more mentees and mentors in its mentorship programme.

“We have a medium to long term programme to ensure all Ecobank Nigeria staff become chartered members of the institute.

“At Ecobank, we take human capacity development very seriously. Some of our staff that wrote the last examinations are now chartered members of the Institute.

“We will also ensure bulk subscription of our staff. We will be nominating 30 mentors and 100 mentees to participate in the second mentorship programme,” he assured.

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Banking

VBank Brightens Spirits at Lagos NYSC Orientation Camp

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VBank NYSC Orientation Camp

By Modupe Gbadeyanka

The National Youth Service Corps (NYSC) orientation camp in Lagos was recently brightened by VFD Microfinance Bank, owners of the 2020 banking app of the year, VBank.

The financial institution, for 10 days, entertained corps members and officials alike at their Games Veelage, an arcade set up with interesting games including snooker, Jenga, fuss ball, chess, scrabble, snakes & ladders and video games.

At the climax last Sunday, 15 NYSC members won N150,000 in cash prizes, while others received loads of consolation gifts.

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Dayo Osborne, Gbenga Benedict, Olamide Ojedele, and Joseph Eweje were some of the winners of the N20,000 cash prize category and were rewarded instantly via transfer from the digital banking app, VBank.

While onboarding the graduates on the banking platform, the brand created an avenue for the Batch A Stream 2A corps members to relax after their usual daily camp routine.

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The bank had equally sponsored the inter-platoon games night which took place days before, gifting participants cash transfers using the app’s Proximity Payment feature.

According to Ebere Ahaotu, Product Manager, VBank, “It is our little way of encouraging young people to keep hope alive.

“Camp life can be hectic and VBank is all about ease and convenience so why not brighten up their camp experience, introduce them to a better way to bank and assist them with some funds to transport them to their places of primary assignment. It’s about paying it forward.”

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The corps members have since been posted to different places of assignment within the state while another stream gets ready for camp in July.

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