Union Bank of Nigeria, one of the oldest banks in the country with an international banking authorization, has said it will be seeking shareholders’ approval to spin off its United Kingdom (UK) subsidiary to shareholders.
The bank will meet shareholders in March, 2022, at an Extraordinary General Meeting (EGM) in Lagos and may entail giving the shares to its shareholders on a pro rata basis.
While shareholders will henceforth directly hold shares in the UK subsidiary, those whose equity interest is less than 0.2546 per cent will have their ownership held in trust through Stanbic IBTC Trustees, Union Bank said in a notice.
The decision may be linked with the bank’s inability to sell off the UK subsidiary, which constitutes the only reason for retaining the international banking licence, although that subsidiary has stopped operations for over eight years.
The Central Bank of Nigeria (CBN) continues to assess Union Bank based on the requirements of international banking license, especially the requirement to maintain a capital adequacy ratio of 15 per cent contrary to the 10 per cent requirement for banks with national banking authorisation.
Union Bank is on this assessment alongside seven other Nigerian banks which hold international banking licences.
Commenting on the announcement, Dr Lizzie Kings-Wali, Chief Executive of Blackstone Capital, said “This is a smart strategy of freeing up the bank from the burden of international banking license, especially as it does not run the UK operations. On completion of this spin off exercise, Union Bank would step down its license to national authorisation and henceforth be appraised on 10 per cent capital adequacy ratio.”
Exactly two months ago, December 23, 2021, Union Bank said Titan Trust Bank Limited, which has a national banking license, would be buying 89.39 per cent majority stake in Union Bank. Titan Trust Bank has only operated for two full years following the grant of its licence by CBN in July, 2019.