Chuks Udo Okonta and agency report
Union Assurance Limited will soon be wean as Union Bank its parent
company has said it will divest non-banking subsidiaries within the next
18-months to comply with Central Bank of Nigeria (CBN) regulations.
Nigeria's central bank three-years ago stopped issuing universal
banking licences and enforced new minimum capital requirements for banks in a bid to avoid a repeat of a 2009 near
collapse of several lenders, including Union Bank.
Union Bank scaled a recapitalisation hurdle after the central bank
propped it up and it agreed a $750 million cash injection by a group of
investors to keep it afloat.
"Following (central bank) approval, Union Bank will proceed
to divest its interests in its non-banking and portfolio companies ... and
operate as an international commercial bank," Union's Chief Executive
Emeka Emuwa, told Reuters.
Emuwa said the bank had 18 months to implement the divestment,
citing that owning non-banking units had become less important with the growth
in its core business and its ability to partner with other
firms to cross-sell products.
Central Bank Governor Lamido Sanusi launched a historic $4 billion
bailout of nine banks shortly after taking office in 2009,
pledging to reform the industry and get credit flowing to the productive real
sector and small businesses.
The new banking model requires lenders to sell all non-core
businesses and form a holding company if they intend to carry out insurance,
asset management and capital market activities.
Sanusi has said his primary objective is to ensure banks are
effectively supervised and to ensure the safety of depositors' funds by
prohibiting them from speculative capital market activities.
"The post-divestment structure will ... reduce the overall
risk profile of the bank, while increasing the protection of depositors'
funds," Union's Chief Risk Officer Kandolo Kasongo said, adding that the
sale proceeds will be used to boost its balance sheet
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