From Kunle Aderinokun in Abuja, 05.28.2010
The Board of Directors of Unity Bank Plc and its financial advisers last Wednesday in Abuja rose from a completion board meeting to roll out 23.928 billion ordinary shares of 50 kobo each at N1 per share to shareholders on the basis of three new shares for every two shares already held.
About N23.9 billion is expected to be raised from existing shareholders through a Rights Issue aimed at meeting the Central Bank of Nigeria (CBN) 10 per cent capital adequacy ratio and ensuring long-term sustainability of the current operations and business expansion strategy of the bank.The bank is raising the funds by issuing 23.928 billion ordinary shares of 50 kobo each at N1 per share to shareholders on the basis of three new shares for every two shares already held.
Specifically, 50 per cent or N11.66 billion will be used as working capital/project finance; 25 per cent or N5.8 billion will be used for branch expansion; 10 per cent or N2.3 billion each for technology enhancement and human capital development, while the five per cent or N1.16 billion balance will be used for re-branding.In his letter to shareholders, the Chairman of Unity Bank, Prof. Akin Mabokunje, said the board and management of the bank are confident that in the absence of unforeseen circumstances, the bank will continue to exist as a going concern and record significant growth and improvement in its operations over the coming years.
He said the bank’s competitive strategy aims at redefining performance to impact positively on services to be delivered to stakeholders, while improving its liquidity and profitability position.Mabogunje said: “Strategic alliances in equity, product development and channels of distribution will be entered into to create value for the group and extend its capacity to service chosen markets.”He added that Unity Bank will also seek to enjoy competitive advantage by leveraging on cost leadership, value chain banking and continuous strategic branch expansion while consolidating on its market share.
“Overall, we aim to grow the bank in five years to a level that will put it in the league of top five banks in terms of balance sheet size, income and return on equity. The bank tends to comply with the new CBN strategy in universal banking,” he said.Explaining why the bank opted for Rights Issue, the Managing Director/Chief Executive Officer, Mallam Falalu Bello said: “This right issues is achieving two purpose – one, we are bring in about N24 billion to the bank, two we are diluting the public sector shareholding from 70 per cent to no more than 25 per cent in the first instance. After that, when this money comes in and we meet the 10 percent capital adequacy ratio, then we would come to the market by way of Initial Public Offering (IPO) to raise more money.”
He said: “We have merged successfully, we have integrated successfully, the bank is running profitable now and there are so many things going on that would help us to attain the 10 per cent capital adequacy ratio besides the issue of this right issue.“For instance, some two months back we have advertised sale of a lot of our assets that we inherited from the nine banks that we merged with these banks and the sale has been successful. Today we have sold over N4 billion worth of our assets and that has brought in money, which is equally going to our profit, which would help us in meeting the 10 per cent capital adequacy ratio.“I am very optimistic that by God’s grace, by the end of next month we would be there.”
Commenting on the recent policy of the Central Bank of Nigeria (CBN) on categorization of banks, Falalu said: “I am very happy about the categorisation of banks by the central bank. All that I have fought for even in the days of Prof. Chukwuma Soludo is that it was wrong to say all banks should be of the same size. A bank can decide to be a regional bank or a microfinance bank that would operate only in one local government; one can decide to operate within Nigeria and outside Nigeria. I believe that is what I argued consistently that the regulator should recognise. For me I say congratulation to Sanusi for adopting what is considered to be right.”