By Oludare Mayowa and Chijioke Ohuocha
LAGOS, Aug 7 – Nigeria’s Union Bank has sufficient cover for its 3.9 billion naira ($10.69 million) loan to telecoms group 9mobile and will focus on expanding lending to agricultural and real estate businesses, its chief executive, Emeka Emuwa, said on Monday.
Lenders have agreed to extend a $1.2 billion loan which mobile operator 9mobile, formerly known as Etisalat Nigeria, took out four years ago but struggled to repay due to a currency crisis and a recession in Nigeria.
Emuwa said Union Bank planned to grow its loan portfolio in the sectors that drive economic growth in Nigeria – food and housing.
Union Bank last week posted a 5.9 percent rise in half-year pre-tax profit to 9.46 billion naira.
Shares in Union, down 4.7 percent so far this year, rose 1.15 percent on Monday to 5.30 naira. They shed 20.3 percent last year.
The bank plans to raise 50 billion naira ($137 million) in fresh capital via a rights issue by the end of the year to boost lending and hopes to win approval from the Securities and Exchange Commission for the plan this quarter, Emuwa said.
The mid-tier lender has obtained a green light from the central bank after shareholders approved the capital increase to support growth and meet regulatory requirements.
Emuwa said Union Bank was targeting capital ratios of close to 20 percent after the rights issue from around 15 percent now, adding that it has sufficient cover for its exposure to 9mobile, until the debt issue is resolved. ($1 = 364.8 naira) (Writing by Chijioke Ohuocha; Editing by Adrian Croft)