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Union Bank Declines on Restructuring Concerns: Lagos Mover

Nov. 5 (Bloomberg) -- Union Bank Nigeria Plc, one of eight lenders bailed out by the central bank three years ago, retreated as investors waited for the outcome of a restructuring, according to Vetiva Capital Management Ltd.

The stock fell as much as 6.7 percent to 7.47 naira, its lowest since Oct. 2, and closed 0.3 percent down at 7.99 naira in Lagos, Nigeria’s commercial capital.

Union Global Partners Ltd., a group of Nigerian and international investors, provided $500 million to complete the bank’s recapitalization, it said on Oct. 19. The management team, led by Chief Executive Officer Emeka Emuwa, the former head of Citibank Nigeria Ltd., took over on Nov. 1.

“Investors are on the sidelines waiting for further progress,” Abiola Rasaq, a Lagos-based analyst at Vetiva, said by phone today. “Investors are still cautious as to the fundamental valuation of Union Bank.”

A debt crisis in 2008 and 2009 resulting from loans to speculators on the Nigerian Stock Exchange and investors in the oil industry threatened to bring down the banking system. The central bank fired the heads of eight of the country’s 24 lenders and established the Asset Management Corp. of Nigeria, or Amcon, to buy bad debts and stabilize the industry.

Union Global now holds 65 percent of Union Bank’s shares, Amcon 20 percent, and minorities 15 percent.

Union Bank has fallen 25 percent this year compared with a 28 percent increase in the Nigerian Stock Exchange All-Share Index.

To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

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