Business a.m
Fitch Ratings, a global rating agency, has placed Union Bank of Nigeria Plc’s (UBN) Issuer Default Ratings (IDRs), Viability Rating (VR) and National Ratings on a Rating Watch Negative (RWN), raising fears of a potential downgrade.
Elaborating on the RWN, Fitch highlighted the uncertainty around the reasons for the CBN’s intervention, the potential for further regulatory action, and the negative implications for UBN’s standalone credit profile. These include the risk of weakening corporate governance practices and liquidity pressures arising from potential instability in funding, due to concerns about UBN’s independence and ability to operate as a standalone entity.
Fitch stated that the RWN is expected to be resolved within six months once there is more clarity regarding the CBN’s intervention and its impact on UBN’s standalone credit profile.
According to the rating agency, a downgrade could be triggered by further regulatory restrictions on UBN’s activities, fines or other findings (such as worse asset quality than reported by UBN), that would result in large losses and deplete the bank’s capital. A downgrade could also result from UBN’s inability to attract or retain deposits, causing funding instability and impacting the bank’s liquidity.
Fitch further stated the ratings could be affirmed and removed from RWN if UBN continues to operate as normal under the new management over the medium term, without any additional regulatory interventions or financial profile implications arising from the management change.
In the aftermath of the CBN’s appointment of Yetunde Oni as UBN’s new managing director/CEO, the bank has reassured its partners, customers and stakeholders that it will continue to provide excellent service and seamless operations.
UBN has emphasised its commitment to the highest standards of corporate governance, as set out by the CBN, and to providing its customers with the best products and services possible. The bank has also stated its intention to continue pursuing initiatives that will help its customers succeed and grow their businesses.
In her remarks as the new managing director of UBN, Yetunde Oni pledged to uphold the bank’s legacy as a Nigerian institution dedicated to helping its customers succeed.
Oni said: “Union Bank is an iconic financial institution with over 106 years of history providing top banking services to the Nigerian people. Under my stewardship, we will maintain our proud heritage and continue to be part of the growth and the success story of Nigeria and its people for the foreseeable future.”
The bank reassured all its customers that its network of branches would continue to operate as usual and that customers would continue to have access to its products and services, which are built on innovative technology. The bank also reassured depositors that their funds were safe and encouraged them to contact the bank via its various channels for assistance with any issues they may have.
