Fitch Ratings has placed Union Bank of Nigeria Plc’s (UBN) Issuer Default Ratings (IDRs), Viability Rating (VR) and National Ratings on Rating Watch Negative (RWN).
The RWN follows the Central Bank of Nigeria’s (CBN) announcement on 10 January that it had dissolved the board and management of three Nigerian banks, including UBN, as a result of regulatory non-compliance, corporate governance failure, disregarding the conditions under which banking licenses were granted and involvement in activities that pose a threat to financial stability, among other infractions.
The CBN has since appointed new executives, including chief executive officers, to oversee the affairs of the banks.
The RWN reflects the uncertainty surrounding the background to the CBN’s intervention, the potential for further regulatory actions and the negative implications for UBN’s standalone credit profile, particularly relating to corporate governance risks and liquidity pressures arising from potential funding instability.
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Fitch expects to resolve the RWN within six months once there is more certainty regarding the CBN’s intervention and the implications for UBN’s standalone credit profile.
A downgrade (and potential resolution of the RWN) could result from further regulatory intervention, e.g. imposition of restrictive measures on UBN’s activities, fines or other regulatory findings (such as weaker asset quality than initially reported by UBN), that would lead to large losses and erosion of the bank’s capital.
The ratings could be affirmed and removed from RWN if UBN continues to operate as normal under the new management in the medium term and there are no additional regulatory interventions or financial profile implications from the management replacement.
New MD pledges seamless service
Union Bank of Nigeria has reassured its partners, customers and critical stakeholders of continued excellent service and seamless operations following the recent appointment of its new Managing Director/Chief Executive Officer, Yetunde Oni, by the Central Bank of Nigeria (CBN).
Oni promised to maintain its legacy as a proudly Nigerian institution steadfast in its commitment to enabling success for its robust customer base.
She noted that under its new leadership, the bank will sustain and drive initiatives that will continue to enable customers to succeed and increase positive business growth.
Speaking soon after the resumption, she said, “Union Bank is an iconic financial institution with over 106 years of history providing top banking services to the Nigerian people.
“Under my stewardship, we will maintain our proud heritage and continue to be part of the growth and the success story of Nigeria and its people for the foreseeable future.”
The bank assured its customers that as a long-standing financial institution in the Nigerian banking industry, it will continue to provide top-quality services and products while operating under the best tenets of corporate governance as enshrined within the guidelines of the CBN.
The bank also assured all its customers of smooth operations in its vast network of branches nationwide and unhindered access to its top-notch, technologically innovative products and services.
