United Bank for Africa- Nigeria’s fourth-biggest lender by market value, said it will create a holding company in the second quarter of next year that will sell shares on the country’s stock exchange.
The bank will relinquish its universal banking license that allowed it offer multiple services and will become an international lender to be known as UBA Plc, the Lagos-based company said in an e-mailed statement yesterday.
The holding company will house UBA Plc, UBA Capital and UBA Africa, a new unit that will coordinate bank’s subsidiaries in 18 other African countries, it said.
United Bank for Africa’s insurance, asset management, stockbroking and investment-banking units will now be under UBA Capital, according to the statement.
UBA wants to put in place “a best-practice structure in accordance with international norms,” Chief Executive Officer Phillips Oduoza said in the statement. Once shareholders approve the plan, it will be submitted to the high court, he said.
After last year’s debt crisis that almost crippled banking in Africa’s most populous country, the central bank in March asked lenders to separate their banking and non-banking businesses to allow for better supervision.
Banks needed to chose whether to operate as regional, national or international lenders and the regulator set minimum capital requirements ranging from 15 billion naira for regional banks to 100 billion naira ($651.5 million) for international lenders.
In September, the central bank said it would repeal universal licenses that allow banks to offer several services, with lenders now having to apply for permits for specific banking functions.
Central Bank of Nigeria Lamido Sanusi last year fired the heads of 8 of the country’s 24 lenders for their handling of the crisis that resulted after investors borrowed to buy shares on the Nigerian Stock Exchange and couldn’t repay debts when prices plummeted. Bank of America Corp.
estimated that at least 1 trillion naira of these so-called margin loans were extended.
“What the central bank wants to do is to see that losses from subsidiaries don’t hit the accounts of banks again,” Mike Uzor, head of Datatrust Consult, a Lagos-based fund manager, said in a telephone interview today.
“Most of the debts they incurred during the crisis came from their capital-market subsidiaries and they simply transferred them onto the banks.”
UBA also said it would establish a new company that will run its real-estate investments worth more than 100 billion naira ($662 million). The unit, which will be known as UBA Properties, will sell shares to “existing shareholders”, according to the statement.
Guaranty Trust Bank Plc, Nigeria’s third-biggest lender by market value, will sell its interests in its non-banking units, including 68 percent of Guaranty Trust Assurance Plc, to focus on its core business, it said on Sept. 17.