Union Bank of Nigeria Plc (NGX: UBN) has given indication that it will be divesting its entire shareholding in Union Bank UK Plc to its Shareholders.
The Bank will hold an Extra-Ordinary General Meeting o Tuesday 29th March 2022 to consider special resolutions bordering on the divestment.
The notice of the meeting due to hold in The Auditorium, Stallion Plaza (9th floor) by 11.00am on the said date was published on the Nigerian Exchange Limited and sighted by Investogist.
At the meeting, Shareholders will be asked to;
- To consider and approve the proposed divestment of the Company’s entire shareholding (direct and indirect) interest in its subsidiary, Union Bank UK Plc (“UBUK”) to all the shareholders of the Company pro rata to their existing shareholding interests in the Company (“the Divestment”); subject to obtaining any required contractual consents and/or regulatory approvals.”
- To approve that in furtherance of the Divestment, the shares to be held in UBUK by shareholders of the Company who each hold less than 0.2546% of the Company’s issued share capital (‘the Shareholders’), shall be placed under a trust (‘the Trust’) to be established with Stanbic IBTC Trustees Limited (‘SITL’), which shall be the legal shareholder of record in UBUK’s register, acting as trustee of the beneficial interests of the relevant UBN shareholders.
- To approve that SITL be and is hereby authorised, on behalf of the shareholders, to enter into and/or execute all such agreement(s) and/or document(s), appoint such professional advisers and/or other parties as may be required, take all such actions and/or steps and do all such other lawful things as may be necessary for, and/or incidental to, administering the Trust in such manner as SITL, acting reasonably, considers appropriate in its capacity as trustee and/or for giving effect to the Trust and or Divestment.
- To approve that the Board of Directors of the Company be and is hereby authorised to enter into and execute such agreement(s) and/or any other document(s); appoint such professional advisers and/or any other parties and take all such other steps and/or actions; in each case as may be required for, and/or incidental to, implementing the Divestment.
- To approve the amendment of the Articles of Association by inserting the following as Clause 56(c),
after Clause 56(b), in compliance with the tenure of Independent Non-Executive Directors in the Central Bank of Nigeria’s (CBN) Guidelines for the Appointment of Independent Directors:
“The tenure of office of Independent Non-Executive Directors shall be for a maximum period of two
(2) terms of four (4) years each, subject to the Central Bank of Nigeria’s (CBN) Guidelines for the
Appointment of Independent Directors on the tenure of Independent Non-Executive Directors”.
Union Bank UK plc was incorporated in England and Wales on 10th February 2003 as a wholly owned subsidiary of the Union Bank of Nigeria Plc (‘UBN’).
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The Bank is authorised under the Financial Services and Markets Act 2000 (FSMA 2000), to carry on regulated
financial services activities, including deposit-taking and dealing in investments as principal. The business of the
Bank includes the provision of retail and commercial banking, treasury and trade finance services.
UBN directly holds 100% holdings of Union Bank UK’s 60,000,000 ordinary shares of US$1 each and 99% of its 50,000 deferred shares of GBP 1 each and 1% indirect holding through Williams Street Trustee Limited, the nominee company of Union Bank of Nigeria Plc.
In January 2020, in order to streamline its business operations and focus on growth opportunities in Nigeria, UBN announced its proposed divestment of its entire equity stake in UBUK, and entered into a share Sale and Purchase
agreement (‘SPA’) with a preferred bidder.
For the whole of 2020, the Bank continued to serve its current customers, whilst preparing for a new strategic direction upon completion of the sale process.
In April 2021 the SPA process was terminated without a sale having been concluded with the preferred bidder.
The financial performance of Union Bank UK Plc has been deteriorating over the past 5 years, according to its Annual Report and Financial Statements for 2020.
The report shows the following financial performance over the past 5 years;
- 2020: Total Income of $6.26 million and (Loss)/Profit after tax of ($16.50 million)
- 2019: Total Income of $14.62 million and (Loss)/Profit after tax of ($11.66 million)
- 2018: Total Income of $13.18 million and (Loss)/Profit after tax of $0.70 million
- 2017: Total Income of $14.29 million and (Loss)/Profit after tax of $2.42 million
- 2016: Total Income of $11.02 million and (Loss)/Profit after tax of $0.49 million
In the report, Union Bank UK attributed the 2020 performance to the transition embarked upon by UBN.
In December 2021, Titan Trust Bank Limited took over Union Bank Plc as the major Shareholder of UBN, Union Global Partners Ltd executed a Share Sale and Purchase Agreement between it, certain other existing shareholders of UBN (as sellers) and Titan Trust Bank Limited (as Purchaser) for the sale of an aggregate 89.39% of the issued share capital of Union Bank held by the Sellers, to the Purchaser (“the Transaction”).
What is Pro Rata?
UBN has stated in its notification that the Company’s entire Shareholding interest in Union Bank UK plc will be given to its Shareholders pro rat to their existing shareholding interests in the Company; but what is Pro Rata?
According to Investopedia, Pro rata is a Latin term used to describe a proportionate allocation. It essentially translates to “in proportion,” which means a process where whatever is being allocated will be distributed in equal portions.
Pro rata typically means that each party or person receives their fair share in proportion to the whole. Pro rata calculations can be used in many areas, including determining dividend payments, which are cash payments by corporations paid to shareholders.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
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