Investors are growing increasingly concerned about Union Bank’s ability to meet the minimum capital requirements for a national banking license.
With a paid-up share capital of N148.1 billion, the bank needs to boost its capital base by at least N51.9 billion to reach the required N200 billion.
This concern comes despite Union Bank’s impressive financial performance in 2023, with pre-tax profit soaring 138% to N71.8 billion.
Gross earnings also grew by 89% to N393.6 billion, while net interest income increased by 53% to N90.4 billion.
However, the bank’s capital base remains a worry for investors. The N200 billion minimum capital requirement for a national banking license is a regulatory requirement, and failure to meet it could result in penalties or even a loss of license.
Union Bank’s restructuring plans, including potential investments from strategic investors, are underway. The consolidation with Titan Trust Bank is still awaiting approval from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC).
Speaking with one of the Investors in the NGX, he noted that investors are eagerly waiting to see how Union Bank will address its capital concerns. Will the bank be able to secure the necessary funding to meet the minimum capital requirements.
(C) BusinessNews
