Our plans for recapitalisation — UBA GMD

The Group Managing Director, United Bank for Africa (UBA), Oliver Alawuba, in this interview on the sidelines of the just concluded World Bank/International Monetary Fund annual meetings in Washington DC, United States, speaks on the takeaways from the meeting, the changing investment climate in Nigeria and the bank’s plans towards recapitalisation. Excerpt:   What has […]

The Group Managing Director, United Bank for Africa (UBA), Oliver Alawuba, in this interview on the sidelines of the just concluded World Bank/International Monetary Fund annual meetings in Washington DC, United States, speaks on the takeaways from the meeting, the changing investment climate in Nigeria and the bank’s plans towards recapitalisation. Excerpt:

 

What has been your experience so far in Washington?

At the Washington World Bank/IMF meetings, it has been a good show for Nigeria. In the course of the meeting, we had a session where the Minister of Finance and the governor of the Central Bank of Nigeria spoke to several investors on the journey so far in terms of the reforms being done in the country.

And I think it was a very beautiful time because they had an opportunity to explain the progress Nigeria is making in the economic reform of this current administration.  And for us banks, we also add our voice to say, yes, things may be tough today in the country, but we have seen improvements, and those improvements, the investors are also witnessing, and the confidence is returning into the Nigerian economy.

How does the bank differentiate itself from other financial institutions in terms of its offerings and customer experience?

For UBA, we are currently present in 24 countries, and we are present in key financial centres of the world, including the United States of America. That alone shows that UBA is connecting Africa to the rest of the world and connecting Africans among themselves, in settlements, payments, and capital flow.

And to do this, the most critical philosophy for UBA is customer experience; excellent customer experience. So, what we do is to get things done from the perspective of the customer.

The customer is the reason why we do our business, and for us, Africa is our home, and Africa remains the frontier market for us in UBA

Can you speak about your operations in the USA?

We are proud to say that UBA is the only bank originating from Africa that is present in the United States of America, regulated with a national banking licence, regulated by the Office of the Comptroller of the Currency  (OCC) and that is a very prime position for us to support payments and to support settlements of businesses that are originating out of Africa, or between Africa and the rest of the world.

Today, UBA America is 40 years old. UBA America is a settlement bank for so many banks out of Africa, and this is what has been very difficult for banks out of Africa to have; settlement banks in our correspondent banks in America.

UBA America is playing that role. UBA America is also banking many central banks because they understand African business, and they are able to bank many central banks as even reserve banks of the central banks.

With  UBA’s foreign operations, how do you mitigate risks associated with currency fluctuations?

Because of the fact that we are present in many countries, we have access to foreign exchange. Things don’t get bad in all the countries at the same time. We have a very diversified portfolio. So, we are able to optimise the sources of efforts across all those countries.

So, we stay on board; we stay moving because we have access to foreign exchanges across several countries where we are present, and we’re optimising them more efficiently.

Regarding the recapitalisation of the banking sector, are you planning to acquire some banks unable to meet recapitalisation, and what are your plans?

The recapitalisation exercise has four options. One is to do a public offer, right issue, acquisition and merger, or to come down on authorisation. For UBA, we ruled out acquisition; we ruled out merger for UBA. UBA will raise the capital. We still have between now and March 31, 2026,  but in the next few weeks, we will commence the process.

Our applications are at the Securities and Exchange Commission for approval, and I believe they will look at it. In a few weeks, UBA will start. And UBA is positioned quite strongly to meet that recapitalisation mandate.

Tell us UBA’s long-term strategy for expanding its presence in the USA and market share?

We have an aspiration in UBA to be top three in any geography where we have a presence. And the way we want to increase the market share clearly will be more organic growth.

We want to grow organically. However, if we have the opportunity for inorganic growth, why not?

Can you tell the level of trade UBA is facilitating between Africa and the USA and then the nature of such businesses?

The truth of the matter is, there are several investors from the United States who are interested in Nigeria. Recently, we’ve seen that some of the monetary policies that the central bank has put in place have encouraged a lot of foreign direct investment and foreign portfolio investment into Africa, and a lot of those foreign portfolio investments go to UBA and a lot of some of the foreign direct investments are also coming to UBA.

We are pushing strongly to support the financial services institutions in Africa to be able to serve as a correspondent bank to do transactions and settlements within the United States of America.

Looking at your recent results described as commendable, considering the operating environment, how sustainable would your results be going forward?

Nigeria is a country that has over 200 million people with a GDP of over $400 billion. UBA keeps in mind that we are present in 24 countries, and over 60 per cent of our revenue comes from outside Nigeria. So, the results we release are the core revenue from the core business of UBA and that revenue would continue to grow.

We saw opportunities in Africa early enough, and we have gone into Africa and invested. Today, Africa is contributing around 70 per cent and those markets are really growth markets.

So, it is not necessarily about Nigeria for UBA, it is a lot more about Africa and the international bank. Today, the event where we are witnessing is co-sponsored by UBA America, and they are doing quite well here.

How successful would your rights offer be, given the high interest rates environment?

Anyone who’s buying UBA shares is buying businesses in 24 countries, you are buying a very diversified portfolio. So you are not concentrating on the issues in Nigeria, which can change in a few months.

The high interest rate regime mentioned can change in the medium term in Nigeria. But UBA is in 24 countries, a piece of the share is a piece of businesses across the 24 countries.