15 January 2014

Nigeria: Unity Bank Repositions for Enhanced Performance

The appointment of a new CEO and two executive directors by Unity Bank, and plans to inject fresh capital are efforts to reposition the bank for better performance.

Most often, Unity Bank Plc has been described by analysts in the banking industry as a sleeping giant. It is believed that the bank, which has every opportunity to be a leading force in the retail banking space, has not maximised that opportunity. Despite its wide network across the country, Unity Bank is not seen by many customers as their bank of choice. However, recent events in the bank have shown that the bank is preparing to turn the tables in its favour.

Historical Background Unity Bank emerged from the largest merger and consolidation in Nigeria's banking industry. Following the banking consolidation spearheaded by the Central Bank of Nigeria (CBN), nine financial institutions with competences in investment banking, corporate and retail banking came together in January 2006 to form Unity Bank Plc. The legacy banks include: Intercity Bank Plc, First Interstate Bank Plc, Tropical Commercial Bank Plc, Pacific Bank Limited, Centre Point Bank Plc, Societe Bancaire Limited, NNB International Bank Plc, Bank of the North Limited and New Africa Bank Plc.

Unity Bank has over 79,000 shareholders comprising of individuals, associations, business institutions within the country and State Governments. It has 236 business offices spread across the country and is continuously increasing this number.

It vision is to be Nigeria's retail bank of choice, while it has a mission to create superior wealth for its stakeholders. Unity Bank's core values include: Teamwork, Passion, Resourcefulness, Integrity, Dependability, Empathy and Excellence.

Financial Performance In the last five years, Unity Bank has reported relatively impressive results apart from 2008 and 2009 when the impact of the financial reforms, which impacted negatively on many banks, also affected its financial performance.

The bank posted a loss of N13 billion in 2008 and another loss of N15 billion in 2009. But the performance witnessed a major rise in 2010 when Unity Bank ended that year with a profit of N12.4 billion. Its profit dropped to N2.69 billion in 2011 before rising to N6.18 billion in 2012. The bank recently made its unaudited results for the nine months ended September 30, 2013. The results showed a bank that is trying to clean up its books for it to make a fresh start, having made huge provision for impairment loss on assets.

The bank recorded a gross earnings of N45.393 billion in 2013, up from N38.9 billion in 2012. Net interest income rose from N18 billion to N21 billion, while total operating income stood at N29 billion, compared with N27 billion in 2012. However, the company made a provision of N3.1 billion for an impairment loss on some assets in 2013, as against none in the corresponding period of 2012. This provision, weighed heavily on the bottomline of the bank, leading to net profit of N1.2 billion in 2013, compared with N3.2 billion in 2012. But in all, Unity Bank's assets stood at N439 billion as at September 2013, up from N396 billion in 2012.

Capital Injection Plan Apparently aware of the need to drive its operations and remain competitive, the bank recently got the approval of shareholders to raise fresh capital of over N38 billion through special placements or rights issue.

The shareholders late last year mandated the board and management of the bank to increase its share capital from N30 billion to N60 billion. They authorised the directors to explore other steps such as mergers and acquisition or any other form of business combination for the purpose of raising capital.

Besides, the shareholders approved that the 38.45 billion issued and fully paid ordinary shares of 50 kobo in the capital of the bank be reconstructed into 9.61 billion ordinary shares.

Speaking on the capital raising exercise, Mr. Henry James Semenitari, who then was a non-executive director but now the managing director/chief executive officer, had said the fund raising would create new businesses for the bank. According to him, the bank had been restructured and transformed to do business in more robust ways in the years ahead.

"We know the importance of capital and that's the essence of the recapitalisation exercise and we hope to raise over N38 billion. The major goal is to emerge among the top five banks operating in the country in the next couple of years. He expressed optimism over the success of the planned recapitalisation, stating that Unity Bank's future growth would be driven by people, process while I will also encourage indigenous businesses.

Before the approval of the recapitalisation, some investors both foreign and domestic were said to have indicated interest to buy into the bank given the potential they see in the financial institution.

A United Kingdom (UK) based Development Partners International (DPI), is among those said to be eyeing Unity Bank. Having an investment portfolio that cover several sectors, financial analysts were excited that DPI's entry into Nigeria's banking industry through Unity Bank will redefine the retail market segment.

New CEO, Executive Directors Apparently preparing ahead of capital raising exercise and strengthen its executive management to capture more share of the retail banking market, Unity Bank last week announced new appointments including CEO and two executive directors(EDs).

Semenitari is the new CEO, while Mr. Abubakar Abba Bello and Ms Arese Alonge are the EDs. Considering their experiences, market analysts said the appointments have sent strong signal to the industry of the Unity Bank's preparation to become a leader in the banking space.

Semenitari holds a Bachelor of Science Degree in Chemical Engineering from the University of Lagos and a Master in Business Administration (MBA) from International Graduate School of Management, University of Navara (I.E.S.E) Barcelona, Spain. He is an alumnus of the Harvard Business School, Advance Management Programme (AMP173) in Boston, United States of America. He is also an alumnus of Cambridge Judge Business School, Advanced Leadership Programme (ALP 1), Cambridge University, Cambridge, UK.

He has over 22 years banking experience in Operations, Internal Control, Branch Management, Credit and Marketing, Commercial and Retail Banking, Consumer, Corporate Banking (Energy) among acquired in banks such as Zenith, Diamond, United Bank for Africa, ACB International Bank and Continental Trust Bank and First City Monument Bank(FCMB). He also held senior Management positions in UBA Plc( as an Assistant General Manager in charge of Commercial and Retail Banking Group and General Manager (Credit and Marketing).In ACB International Bank Plc, held the position of acting MD/CEO, while in he was Executive Director (Business Development) in Continental Bank Limited and General Manager in charge Consumer and Retail Banking in 2003. He joined FCMB in 2005 as ED, Retail and Enterprise Banking with responsibility for developing and growing retail and enterprise banking business across the entire branch network. A position he held till December 2010.

Semenitari's recognised strengths are in Business Process Re-engineering and Design with specialization in Strategic Process Enterprise Management, and Integration of Business process models with Information Technology to drive business at Product and Strategic business unit levels. In addition to these, he has development and implementation experience of major Banking Applications such as Micro Banker/Flexcube, Phoenix, Bank Master, SAP (Systems Application and Product), Globus and Finacle Banking Application among others.

Bello, had his early education at Capital School, Kaduna and King's College Lagos. He obtained B.Sc Accounting, Ahmadu Bello University, Zaria in 1989 and is currently pursuing MBA (University of Liverpool). He has 23 years cognate experience in banking with numerous Nigerian banks rising to be the MD/CEO of United Bank for Africa, Zambia.

On the other hand, Alonge had her high school education at Queens College, Lagos and obtained her BA. in 1988 from the University of Benin. She further obtained an MA in 1998 from the University of Lagos and she is an MBA holder from Lagos Business School (2003). Before her new appointment Alonge serveds as Group Head of Financial Institutions Team at Access Bank Plc. She also served as Deputy General Manager and Group Head of Treasury Marketing Group at the same bank. She started her career in London Borough of Islington before joining GTBank Plc. She later moved to Access Bank.

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