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UBA’s Angola Entry Frustrated as Nigeria Bank Seeks License

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Dec. 17 (Bloomberg) -- United Bank for Africa Plc, which operates in 19 countries on the continent, is renewing attempts to win an Angolan bank license after a first application failed.

UBA was told to reapply three months ago as its first attempt expired following a four-year wait, Chief Executive Officer Phillips Oduoza said in a Dec. 13 interview at the bank’s headquarters in Lagos, Nigeria’s commercial capital.

“Angola is a fairly complex market and they take their time and their processes and methodologies are slightly different from those of other African countries,” he said.

UBA is seeking to enter Angola as part of plans to diversify earnings and reduce reliance on its home market of Nigeria, which accounts for about 78 percent of revenue. The bank’s operations outside the country may account for as much as 25 percent of its business by the end of the year and 50 percent within the next three to five years, Oduoza said.

Ecobank Transnational Inc., the Togo-based bank with a presence in 35 countries on the continent, has a representative office in Angola and is seeking licenses in two more Portuguese-speaking nations next year, CEO Thierry Tanoh said in a Dec. 3 interview in Abidjan, Ivory Coast.

Civil War

Angola’s $114 billion economy, recovering from a 27-year civil war that ended in 2002, will probably expand by 5.1 percent this year, President Jose Eduardo Dos Santos said in October. Angola ranks 153rd of 177 countries on Transparency International’s 2013 Corruption Perceptions Index.

“Angola is a very interesting market and it’s one that’s growing very rapidly and there are a lot of opportunities there,” Oduoza said. “Our plan has always to be in Angola.”

UBA is also interested in Botswana, Ethiopia and Rwanda, though it hasn’t submitted license applications, he said. The bank isn’t interested in acquiring one of three nationalized Nigerian lenders the government is selling, he said.

The bank expects all its African subsidiaries to be profitable by 2015. Kenya, Tanzania, Uganda and Zambia have yet to become profitable because competition is tough due to technological advantages, particularly in Kenya, Oduoza said, referring to mobile-banking products that are widespread in East Africa’s biggest economy. UBA has about five branches in Kenya and is looking to expand with an office in Mombasa, the country’s port city where it isn’t represented, he said.

Expand Operations

“The operations in these countries are fairly small and part of our strategy is to expand them,” he said. “We are putting more resources in these countries, we are putting more capital, we are putting more experienced people, we are putting more products into these countries.”

UBA’s profit declined 4.5 percent to 37.4 billion naira ($235 million) in the first nine months of this year, partly because the cash-reserve requirement on Nigerian public sector deposits was raised to 50 percent from 12 percent by the country’s central bank in July, Oduoza said. The lender is pursuing private deposits and has reduced the public sector’s share to a below 10 percent, he said.

UBA shares rose 0.8 percent to 7.66 naira at the 2:30 p.m. close in Lagos, taking their gain this year to 74 percent and outpacing the 39 percent increase in the Nigerian Stock Exchange All-Share Index.

To contact the reporter on this story: Chris Kay in Lagos at ckay5@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net; Vernon Wessels at vwessels@bloomberg.net

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