GCR Places Union Bank on Ratings Watch Negative
GCR Ratings (GCR) has placed Union Bank of Nigeria Plc on Rating Watch Negative following the dissolution of the Board and Management by the Central Bank of Nigeria (CBN). Recall that Fitch Ratings has recently accorded the bank the same, citing the apex bank’s intervention in its board composition.
Concurrently, GCR also placed Union Bank of Nigeria Plc’s N6.3 billion Series 2 Senior Unsecured Bonds national scale long-term issue rating on Rating Watch Negative. The Rating Watch Negative is expected to be resolved over the next six months, according to the rating note.
It said the ratings action follows the announcement of the dissolution of the Board and Management of three banks. Following a special investigator into an infraction committed by the former CBN governor Godwin Emefiele, the CBN sacked the board of directors of Union Bank of Nigeria Plc
The apex bank cited regulatory non-compliance, corporate governance failure, disregarding conditions under which the bank’s licence was granted and involvement in activities that pose a threat to financial stability, among others.
An interim Managing Director/CEO and an Executive Director have been appointed by CBN subsequently. GCR said in the rating note that while investigations by the CBN are ongoing, its assessment of management and governance may likely weaken -dependent on the outcome of the investigations – and some financial ratios deteriorate.
The rating note stated that GCR will take appropriate further action once additional information is received and the impact of the development becomes clearer. Naira Steadies as Banks Issue Update on FX Purchase