THE United Bank for Africa (UBA), Nigeria's fourth-biggest bank, will seek a local banking licence for its branch in Zambia to meet the country's new capital requirements.
UBA managing director Phillips Oduoza said on Wednesday that the bank's intention was to transform the current international licence for UBA Zambia to the local one to meet the new regulatory requirement, according to the international media.
He told a conference call from Lagos in Nigeria that the bank had engaged the Central Bank in Africa's biggest copper producing country on the matter.
Early this year, the minimum capital requirement was increased from K12 billion (or $2.3 million) to K104 billion or $20 million for local commercial banks and to K520 billion or $100 million for foreign banks like UBA Zambia.
"We intend to convert our license from that of an international bank. What we have done is to engage the regulators," Mr Oduoza told conference call from the Nigeria's commercial capital.
UBA expects its African operations outside Nigeria to contribute about 25 per cent of earnings by end of the year, up from 19 per cent in the first quarter and 22 per cent in the second three months.
In April 2012 UBA was considering merging its Zambian unit with one or more other local banks to meet a new regulatory minimum capital.
Mr Oduoza had told a similar function then that it was just one of the options which were being considered. At that time the shareholder funds for the Zambia unit stood at 2.48 billion naira ($15.77 million.
Mr Oduoza had said the pan-African lender will tap equity markets to raise finance in order to boost its African operations when stock markets improve.
The Zambian Cabinet in January approved the measure to raise the capital requirement for commercial banks "consequent to the recommendations of the Bank of Zambia (BoZ) board".
The change was made on a tiered basis, with different demands on local and foreign banks.
According to Finance Minister Alexander Chikwanda the measure was intended to mobilise additional resources to enable banks to participate more effectively in growing the economy by increasing credit available to the private sector.
It will further make the banks more resilient to economic shocks.