Fitch Flags Union Bank: Negative Watch After CBN Shake-up

In response to the recent intervention by the Central Bank of Nigeria (CBN), Fitch Ratings has placed Union Bank of Nigeria (UBN) on a Rating Watch Negative (RWN).

This move comes following the regulatory body’s dissolution of the board and management of three Nigerian banks, including UBN, citing reasons related to regulatory non-compliance and corporate governance failure.

The Rating Watch Negative (RWN) signifies the uncertainty surrounding the CBN’s intervention, potential further regulatory actions, and the potential negative impact on UBN’s stand-alone credit profile. Fitch aims to resolve this RWN within the next six months, seeking more clarity on the CBN’s intervention and its implications for Union Bank’s credit profile.

The downgrade risks for UBN include additional regulatory interventions, such as restrictive measures, fines, or findings affecting the bank’s asset quality, potentially resulting in substantial losses and capital erosion. Funding instability, such as a deposit run or unavailability of additional liquidity sources, could also contribute to a downgrade.

However, Fitch notes that ratings affirmation and removal from RWN are possible if Union Bank operates normally under the new management without further regulatory interventions or adverse financial profile implications.

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Meanwhile, Union Bank has sought to reassure its stakeholders, issuing a statement assuring seamless service despite the recent leadership changes. The bank expressed confidence in the appointment of Mrs. Yetunde Oni as its new Managing Director, citing it as a positive development. The bank emphasized that the transition to the new leadership would be smooth, ensuring no disruption to daily operations.

Union Bank pledged to maintain its commitment to corporate governance guidelines set by the Central Bank of Nigeria, sustaining initiatives that drive customer success and positive business growth under the new leadership. Mrs. Yetunde Oni, the newly appointed Managing Director, affirmed the bank’s commitment to its over 106-year history, promising to uphold its legacy and contribute to the growth and success story of Nigeria.

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Customers were assured of smooth operations across Union Bank’s vast network of branches nationwide, with uninterrupted access to its top-notch, technologically innovative products and services. The bank also reiterated the safety of depositors’ funds and encouraged the use of various channels for inquiries or assistance in resolving any issues.