UBA Adopts Holding Company Model, to list UBA Properties
Category: Capital Market
Lagos, October 18, 2010
Following recent regulatory changes in Nigeria, pan African banking group, United Bank for Africa Plc (UBA) has announced that it will be implementing an innovative holding company structure that will drive operational efficiency, support its ambitious growth strategies and be a significant driver of shareholder value, while complying with the guidelines mandated by the Central Bank of Nigeria (CBN) for the separation of banking and non-banking financial service businesses.
Under the new structure, UBA Holdings Plc (UBA Holdings) will be established as the group parent, listed in Lagos with three operating subsidiaries - UBA Plc, which will remain listed, UBA Capital and UBA Africa.
UBA Properties, the Group’s real estate operations will be spun off to shareholders as a separate listed entity, offering an immediate and tangible example of the Group’s commitment to identify and realise value for its shareholder base.
UBA Plc: will in line with the new CBN guidelines, hold an international bank licence, remains the flagship business of the group. It will provide banking services to customers within Nigeria and in key international locations, including New York, London and Paris. UBA Plc will continue to leverage its large network of branches (700) and an innovative suite of e-banking products to serve its over 7.5 million customer accounts spread across Nigeria.
UBA Capital: will encompass all the non-bank financial services businesses of the Group. These businesses, which have been providing synergistic benefits to the Group, include Asset Management, Stock-Broking, Insurance Broking, Trusteeship, Investment Banking and Company Registrar Services.
UBA Africa: with the increasing importance of the Pan African operations within the UBA group portfolio(presence in 18 Countries outside Nigeria), a dedicated business unit to hold all its bank subsidiaries across Africa outside Nigeriawill be created toprovide the focus required for the delivery of its growth objectives in all these markets. UBA Africa will have its leadership in Nigeria and will work closely with UBA Plc to provide services to customers across jurisdictions where its conductsbusiness.
UBA Properties is being established for the management of the group’s real estate business and, as an example of UBA’s commitment to demonstrating shareholder value, will be spun out to existing shareholders of UBA Plc. The group is confident that the efficiencies to be gained from this initiative will improve the return on existing real estate investments, which currently stand at over N100billion. With a dedicated management and a core real estate focus, the business will significantly increase value for all existing shareholders.
The introduction of a further pure-play real estate business (through UBA Properties) by the UBA Group to the Nigerian Stock Exchange, will offer investors further opportunities for diversification and deepen the bench of quality stocks available to the growing institutional investors base in the country.
The new arrangement, which is subject to approval by the regulatory authorities, will see UBA Plc replacing its universal banking licence with an international banking licence. A scheme of arrangement will be put to shareholders and on approval, will be submitted to the High Court. Implementation is expected in Q2 2011. Prior to CBN directive, the Bank had already been in the process of implementing a holding company structure, but the recent directive by the CBN seems to have enabled the group fast track the execution of its plans.