• We’ll Conclude Recapitalisation Bid By Q3, Board Assures

Unity Bank Plc, on Wednesday presented its audited financials for the year ended December 31, 2016, with the external auditors calling attention to the urgent need for the bank’s shareholders which includes the Asset Management Corporation of Nigeria (AMCON) with 34.42% stake, to inject fresh capital.
Ahmed Zakari & Co, the auditors noted the increase in the bank’s Non-Performing Loans (NPL) ratio of 48% and 97%, based on International Financial Reporting Standard (IFRS) and the Central Bank of Nigeria (CBN) Prudential Guidelines measurement criteria respectively.
With this, it was noted, Unity Bank’s tier 1 capital has remained eroded, “as indicated by the negative capital adequacy ratios for two consecutive years- 2015 and 2016.”
As if reacting to this observation, the directors said discussions “towards attracting willing and committed prospective financial and institutional investors… are at various stages of investment decisions to inject substantial capital to the bank.”
Also, they noted that “the capital raising exercise has been diversified to engage several strategic investors, deliberate actions were taken by the bank to strictly extract commitment following the review of capacity, investment funding availability and strong poise and strategic alignment to the long-term vision and aspirations of the Bank that form the basis to invest in Unity Bank.”
Added to this, the bank said it “had serious discussions with several private equity interests with the view to injecting substantial capital into the system. Due diligence has largely been concluded by all parties and the bank has received several binding offers that are currently being reviewed and considered. It is expected that this exercise will be concluded by the second quarter of 2017.”
The management said it had also extended its capital mobilization horizon to harness substantial equity from credible Nigerians who have committed to inject capital into Unity Bank.
The bank also noted that some strategic actions are being pursued by existing shareholders/core investors to shore up its share capital in a bid to complement the external capital raising exercise such as capital injection by existing shareholders to generate substantial investment for which significant progress is being recorded.
“The planned strategy is to concurrently complement the external investors’ capital injection in acquisition of significant/controlling interest in the bank.
Also, “NPLs sales proceeds with initial consideration payment of N6.43billion and cash flow waterfall of (about) N60bn over the five-year period. The cash flow will impact on capital positively over the period which will benefit the entire shareholders of Unity Bank (both existing and potential investors).”
Added to this is a plan to conclude the recapitalization process in the third quarter of this year, besides a “divestment proceeds from sale of non-banking assets and idle assets in 2016 financial year to comply with regulatory directives.”
Media reports last year said the Trade Union Congress (TUC) plans to acquire about 50% of Unity Bank shares worth about N80 billion, of which the Association of Senior Staff of Banks Insurance and Financial Institution (ASSBIFI) would contribute over N40bn to be sourced from workers’ contributions and support from development partners.