Union Bank

[threecrown]

Originally Posted by riskreturn

But, is GT Bank too a one-man bank, with its reputation of having in place a world-calss institutional structure and core values?

Second, being a one-man institution is sometimes not appreciated as a plus in Nigerian stock market and this seems to explain why BCC trades at P/E ratio of about 3 digits while WAPCO trades at P/E ratio of about 20; Dangflour too is too trade at a much higher P/E ratio (when results are released) than Flour Mills of Nigeria.

And, come to think of it, not being a one-man business may sometimes be a disdvantage, as in the case of Wema Bank - which was (and probably, is) being speculated to be a take-over target by the one-man FCMB. We should also not forget that UBN too was similarly speculated to be a take-over target of Zenith Bank some 3 years ago. Corporate governance situation in Nigeria is such that the so-called one man is often needed as a sort of core investor to provide a focus and a direction for the business and this probably explains why Dangote quoted coys trade at higher P/E ratios than others in the same industry.

The one man business have not only been the driving forces in all sectors of economies all over the world, they also set vital paces for others. we surely need them.

[threecrown]

But Union bank did a PP sometime last year. Can someone confirm this please.

[fredski]

Originally Posted by riskreturn

But, is GT Bank too a one-man bank, with its reputation of having in place a world-calss institutional structure and core values?

Second, being a one-man institution is sometimes not appreciated as a plus in Nigerian stock market and this seems to explain why BCC trades at P/E ratio of about 3 digits while WAPCO trades at P/E ratio of about 20; Dangflour too is too trade at a much higher P/E ratio (when results are released) than Flour Mills of Nigeria.

And, come to think of it, not being a one-man business may sometimes be a disdvantage, as in the case of Wema Bank - which was (and probably, is) being speculated to be a take-over target by the one-man FCMB. We should also not forget that UBN too was similarly speculated to be a take-over target of Zenith Bank some 3 years ago. Corporate governance situation in Nigeria is such that the so-called one man is often needed as a sort of core investor to provide a focus and a direction for the business and this probably explains why Dangote quoted coys trade at higher P/E ratios than others in the same industry.

Originally Posted by threecrown

The one man business have not only been the driving forces in all sectors of economies all over the world, they also set vital paces for others. we surely need them.

Truly, there really is nothing wrong with a one man business, but may I correct the for a moment threecrown. The small business has been and is the driving force in any economy. Also one-man institution is sometimes not appreciated as a plus in the major staock markets.

The one man business must metamorphosis in order to achieve longevity. A business must out live its proprietor. A lot of businesses in Nigeria die with their proprietor because systems for continuity are not put in place and on time. Most of the big business today started as one man businesses.

Talking about Dangote, when the guy sneezes, bank managers tremble and send for the doctor. Zenith, this bank belongs to Jim, and 90% of properties occupied by Zenith belong to Jim. He just rents them out on long lease to HIS bank should he pass now, what happens. Should he pass intestate what happens?
A system or entity where every thing revolves around one individual can not prosper indefinitely.
Union Bank does not fall into this Category

[riskreturn]

Originally Posted by fredski

Truly, there really is nothing wrong with a one man business, but may I correct the for a moment threecrown. The small business has been and is the driving force in any economy. Also one-man institution is sometimes not appreciated as a plus in the major staock markets.

The one man business must metamorphosis in order to achieve longevity. A business must out live its proprietor. A lot of businesses in Nigeria die with their proprietor because systems for continuity are not put in place and on time. Most of the big business today started as one man businesses.

Talking about Dangote, when the guy sneezes, bank managers tremble and send for the doctor. Zenith, this bank belongs to Jim, and 90% of properties occupied by Zenith belong to Jim. He just rents them out on long lease to HIS bank should he pass now, what happens. Should he pass intestate what happens?
A system or entity where every thing revolves around one individual can not prosper indefinitely.
Union Bank does not fall into this Category

I agree with your point. I once advised a friend not to be over-exposed to shares in Dangote subsidiaries by subscribing heavily for its offers for sale and, if he must so subscribe for them, he should take exit not long after the shares are listed. There is no point, out of self-interest, for having to single out Aliko Dangote for special prayer every morning for his good health, his safety, absence of distracting domestic problem in his household (including serious misunderstanding with his wife/wives), etc because all these could affect the performance of his companies and, hence, their share prices. The same goes for many other one-man coys quoted in the NSE.

But, investors in NSE have not tried to factor this into their investing behaviour. And this should explain why Zenith Bank (which you have cited as an examle of one-man bank) has often been trading at higher P/E ratios than GT Bank. There is a difference between what the situation ought to be and what it really is.

[billions]

@All: one man businesses are generally more risky but they are more aggressive/grow faster.In investments,we are rewarded for the risk we take...so they tend to be more rewarding.

Union bank is over 90yrs old,1st bank is over 100yrs old...both Zenith/GTbank are less than 20yrs old.These new generation banks have performed brillantly well considering d time they were established.

Decisions as to which of the banks to invest in depends on age,personality and appetite for risk.

@riskreturn:The fact that Zenith just listed new shares from R.I/P.O contributes to d high PE...when GTbank concludes her offer,the story may not be d same.

Note:I have shares in the old generation banks,new generation banks and the "one man" banks.

[zainabusman]

Originally Posted by threecrown

But Union bank did a PP sometime last year. Can someone confirm this please.

No they did not. They got approval from shareholders to issue not more than 30% of the banks share capital to a foreign investor. That was in the 4th Qtr last year. This PO will probably include this sale which is why it is probably for such a large amount.

They did a PO in late 2005/early 2006 at N20 i think.

[billions]

On second thot,UBN shd be able to declare a FY PAT of abt 29b,the PE wld be 16.8 ...which very good.

Note: Q2 PAT is 13.5b.

[billions]

Proshare Articles
Union Bank Plc, facts on jumbo offer
Posted Wednesday, August 6, 2008


“Union Bank of Nigeria Plc (UBN) has a current market capitalisation of N414.9 billion (US$3.28 billion). At current market price, the bank trade at an 18.9x LTM earnings, tandem with the top tier pier average. 2008 forward P/E multiples for bank, based on earnings growth under current management yields valuation multiples that are at a discount to similar sized peers (14.5x versus 21.1x). Potential improvements in asset management, earnings and market share resulting from the emergency of a multinational strategic partner could greatly improve the upside on our forecast valuations”


“Despite stiff competition and resent market declines, Union Bank continues to surprise the market with results that reflect the bank’s strength in depth. The bank lethargic pace belies the sheer extent of the opportunity that exists for a bank of this scale in Nigeria. An injection of new capital and management expertise, either from a foreign strategic investor or a domestic merger/acquisition partner could be the catalyst to awakening the sleeping giant. An awakened Union Bank would undoubtedly be a tough competitor in all segments of the Nigeria banking market” (Source: Afrinvest West Africa Nigerian Banking Sector Report, January, 2008)


Barth Ebong, Group Managing Director/Chief Executive Officer (GMD/CEO) of Union Bank of Nigeria Plc (UBN) in a pre-offers media parley with Editors, Business/News Editors highlighted some major facts on the banks proposed hybrid offer.

The bank would be offering to members of the Nigerian Investing Public 7,300435,466 billion by way of Public Offer (PO) at N36.00 per share and Rights Issue of 1,117,650,000 billion at N35.00 per share respectively. The hybrid offer is expected to commence August 18, 2008. Below are some of the facts on the hybrid offer. Excerpts:



Central Bank of Nigeria (CBN) and N25 billion capital base

I think we have gone past that as it is today, the minimum capital base of N25 billion can stand but we have to get to N300 billion, this is how much we would do. The time is gone past us, because every bank today is a universal bank, those that do not have subsidiaries before now; currently does, they also have branches all over the nooks and crannies of the nation.

Thus, whosoever comes in today, can still come and start a commercial bank. The issue is that the market is open, we believe we can compete at N25 billion and survive. But certainly we need to expand our capacity in order to play globally.



Current position of Union Bank and its foreign investor



We couldn’t make it; due to regulatory issues as soon as we came out with the idea, it is a regulatory issue, the CBN came up to say that they were not going to allow any foreign bank.



We were targeting that this bank would bring in for us some skills, some periods of business activities and so the CBN say they were not going to allow foreign banks come into any of the Nigerian banks; at this point in time, the minimum that has being set is that no foreign bank should have more than what a Nigerian Bank has in terms of holding.



The maximum should be 10 percent and that is where we are, as it is today, the circular on that has not been actually issued so we are not too sure yet.

It has being discussed by the bankers committee and announced but it hasn’t come out yet. This is where we are at the moment.

Therefore, we decided to come to the market; since we have waited too long for that. First and foremost 30 percent is not all that attractive to these foreign investors, much less 10 percent. Union Bank is not pushing that anymore for now.

Return money and interest

Yes of course Union Bank would return money with interest in the event of oversubscription of the hybrid offer.

Projection on oversubscription


Every projection that is done in every institution comes as events unfold, we do not anticipate; because we do not know how much oversubscription that we would get.



We would rather make our projections on the basis of what we are going for. The bank would not do projections based on the excess that it would have.



Hybrid offer open date and target amount



We are looking at August 18, 2008 or thereabout, we would be able to open the hybrid offer. Our target amount is about N301 billion.



On e-Allotment



There are still investors who would prefer that they get their certificates/dividends warrants in hard copy. We would do the distribution of the share certificates based on individual shareholder’s choice.



However, we would prefer to do the e-allocation as the case maybe, but in a situation where we have objections, we would certainly respect the views of our shareholders.

[XXCASH]

Originally Posted by billions

Proshare Articles
Union Bank Plc, facts on jumbo offer
Posted Wednesday, August 6, 2008


“Union Bank of Nigeria Plc (UBN) has a current market capitalisation of N414.9 billion (US$3.28 billion). At current market price, the bank trade at an 18.9x LTM earnings, tandem with the top tier pier average. 2008 forward P/E multiples for bank, based on earnings growth under current management yields valuation multiples that are at a discount to similar sized peers (14.5x versus 21.1x). Potential improvements in asset management, earnings and market share resulting from the emergency of a multinational strategic partner could greatly improve the upside on our forecast valuations”


“Despite stiff competition and resent market declines, Union Bank continues to surprise the market with results that reflect the bank’s strength in depth. The bank lethargic pace belies the sheer extent of the opportunity that exists for a bank of this scale in Nigeria. An injection of new capital and management expertise, either from a foreign strategic investor or a domestic merger/acquisition partner could be the catalyst to awakening the sleeping giant. An awakened Union Bank would undoubtedly be a tough competitor in all segments of the Nigeria banking market” (Source: Afrinvest West Africa Nigerian Banking Sector Report, January, 2008)


Barth Ebong, Group Managing Director/Chief Executive Officer (GMD/CEO) of Union Bank of Nigeria Plc (UBN) in a pre-offers media parley with Editors, Business/News Editors highlighted some major facts on the banks proposed hybrid offer.

The bank would be offering to members of the Nigerian Investing Public 7,300435,466 billion by way of Public Offer (PO) at N36.00 per share and Rights Issue of 1,117,650,000 billion at N35.00 per share respectively. The hybrid offer is expected to commence August 18, 2008. Below are some of the facts on the hybrid offer. Excerpts:



Central Bank of Nigeria (CBN) and N25 billion capital base

I think we have gone past that as it is today, the minimum capital base of N25 billion can stand but we have to get to N300 billion, this is how much we would do. The time is gone past us, because every bank today is a universal bank, those that do not have subsidiaries before now; currently does, they also have branches all over the nooks and crannies of the nation.

Thus, whosoever comes in today, can still come and start a commercial bank. The issue is that the market is open, we believe we can compete at N25 billion and survive. But certainly we need to expand our capacity in order to play globally.



Current position of Union Bank and its foreign investor



We couldn’t make it; due to regulatory issues as soon as we came out with the idea, it is a regulatory issue, the CBN came up to say that they were not going to allow any foreign bank.



We were targeting that this bank would bring in for us some skills, some periods of business activities and so the CBN say they were not going to allow foreign banks come into any of the Nigerian banks; at this point in time, the minimum that has being set is that no foreign bank should have more than what a Nigerian Bank has in terms of holding.



The maximum should be 10 percent and that is where we are, as it is today, the circular on that has not been actually issued so we are not too sure yet.

It has being discussed by the bankers committee and announced but it hasn’t come out yet. This is where we are at the moment.

Therefore, we decided to come to the market; since we have waited too long for that. First and foremost 30 percent is not all that attractive to these foreign investors, much less 10 percent. Union Bank is not pushing that anymore for now.

Return money and interest

Yes of course Union Bank would return money with interest in the event of oversubscription of the hybrid offer.

Projection on oversubscription


Every projection that is done in every institution comes as events unfold, we do not anticipate; because we do not know how much oversubscription that we would get.



We would rather make our projections on the basis of what we are going for. The bank would not do projections based on the excess that it would have.



Hybrid offer open date and target amount



We are looking at August 18, 2008 or thereabout, we would be able to open the hybrid offer. Our target amount is about N301 billion.



On e-Allotment



There are still investors who would prefer that they get their certificates/dividends warrants in hard copy. We would do the distribution of the share certificates based on individual shareholder’s choice.



However, we would prefer to do the e-allocation as the case maybe, but in a situation where we have objections, we would certainly respect the views of our shareholders.

This bank is either very crazy or intelligent for coming out with this PO at this time. To get 300b from the market now is for sure a tall task
Well all the best Union Bank

[zainabusman]

Originally Posted by XXCASH

This bank is either very crazy or intelligent for coming out with this PO at this time. To get 300b from the market now is for sure a tall task
Well all the best Union Bank

The rule requires 80% must be underwritten. So they will get what they want. But at a huge cost especially if the offer fails. This is because a new ownership structure will emerge which the major shareholders might not like.

Another disadvantage of this offer is that it could further drain the system of liquidity in view of the amount involved.

[Michael]

Originally Posted by zainabusman

The rule requires 80% must be underwritten. So they will get what they want. But at a huge cost especially if the offer fails. This is because a new ownership structure will emerge which the major shareholders might not like.

Another disadvantage of this offer is that it could further drain the system of liquidity in view of the amount involved.

I am sure this may create an opportunity to buy this stock in the market eventually much below offer price.

[nkemjika]

Any info on their finanacial yr end(31-Mar-2007) result? I do think that the result will determine how investors will patronize the PO. Reactions from all will be appreciated.
Tnx.

[tonidol]

Originally Posted by nkemjika

Any info on their finanacial yr end(31-Mar-2007) result? I do think that the result will determine how investors will patronize the PO. Reactions from all will be appreciated.
Tnx.

Result will not make any impact here cos partakers in the PO will not benefit from the largesse if any.

Secondly, any coy in the market to raise funds will always present attractive figures. We are used to that now.

For me, it is status quo. I cannot even buy Union Bank for N30.

[riskreturn]

I still believe that UBN (and its PO underwriters) must be up to something. It must just be keeping its card close to its chest, for it seems obvious that, with the ordinary results it has been releasing (and its inability or reluctance to release Q3 and Q4 results so far), it should realise that investors would not be enthused to subscriber for the offer at 36 Naira (when, without the technical suspension and seemingly false rumour of 1 for 4 bonus, it should be trading now at below 30 Naira in the secondary market). Without something it is up to (which we are still left guessing), I doubt if the underwriters would be so daring to be a party to the PO. If the underwriters have up to N240 billion (80% of about N301 billion offer value) or a good fraction of this to risk in subscribing for UBN shares @ N36 just for token fees, why don't they use the money to buy diversified stocks cheap in the currently depressed market? There must be something we do not yet know which UBN and its underwriters know.