On March 28, 2024, the Central Bank of Nigeria announced new minimum capital requirements of N500 billion and N200 billion for commercial banks with international and national authorization respectively. The apex bank further unveiled a new capital base of N50 billion for banks with regional licenses. The CBN also pegged the new minimum capital for merchant banks at N50 billion, while non-interest banks with national and regional authorisations are mandated to raise their capital thresholds to N20 billion and N10 billion, respectively. All fresh capital requirements are to be satisfied by March 31, 2026. In this interview held recently in Washington DC on the sidelines of the 2024 annual meetings of the World Bank and IMF, the Group Managing Director and CEO of United Bank for Africa, Oliver Alawuba, speaks on the operations of the bank in the United States, how UBA is mitigating risks associated with currency fluctuations and how the bank is prepared for the upcoming recapitalisation exercise. Alawuba rules out acquisition and merger for UBA. He says UBA will raise the capital. Excerpts:
What was your Washington experience?
The World Bank Annual Meetings was a good show for Nigeria. We had a session where the Minister of Finance and the governor of the Central Bank of Nigeria spoke to several investors on the journey so far in terms of the reform being done in the country.
And I think it was a very beautiful time because they had an opportunity to explain the progress Nigeria is making in the economic reform of this current administration. And us banks, we also bear to add our voice to say, yes, things may be tough today in the country, but we have seen improvements, and those improvements, the investors are also witnessing that, and the confidence is returning into the Nigerian economy.
What is the global spread of UBA presently?
For UBA, we are currently present in 24 countries, and we are present in key financial centers of the world, including the United States of America. That alone shows that UBA is connecting Africa to the rest of the world and connecting Africans among themselves, in settlement, payments, and capital flow. And to do this, the most critical philosophy for UBA is customer experience, excellent customer experience.
So, what we do is to get things done from the perspective of the customer. The customer is the reason why we do our business, and for us, Africa is our home, and Africa remains the frontier market for us in UBA
What is the operation of the bank in the United States?
We are proud to say that UBA is the only bank originating from Africa that is present in the United States of America, regulated with a national banking license, regulated by the Office of the Comptroller of the Currency (OCC) and that is a very prime position for us to support payments and to support settlements of businesses that originating out of Africa, or between Africa and the rest of the world.
Today, UBA America is 40 years old. UBA America is a settlement bank for so many banks out of Africa, and this is what has been very difficult for banks out of Africa to have settlement banks in our correspondent banks in America.
UBA America is playing that role. UBA America is also banking many central banks because they understand African business, and they are able to bank many central banks as even reserve banks of the central banks.
How is the bank mitigating risks associated with currency fluctuations?
Because of the fact that we are present in many countries, we have access to foreign exchange. Things don’t get bad in the entire country at the same time, we have a very diversified portfolio. So, we are able to optimize the sources of efforts across all those countries. So, we stay on board, we stay moving because we have access to foreign exchanges across several countries where we are present, and we’re optimising them more efficiently
“The recapitalisation exercise has four options. One is to do a public offer, right issue, acquisition and merger, or to come down on authorisation. For UBA, we ruled out acquisition, we ruled out merger for UBA. UBA will raise the capital. We still have between now and March 31, 2026 but in the next few weeks, we will commence the process”
How prepared is UBA for the upcoming recapitalization exercise?
The recapitalisation exercise has four options. One is to do a public offer, right issue, acquisition and merger, or to come down on authorisation. For UBA, we ruled out acquisition, we ruled out merger for UBA. UBA will raise the capital. We still have between now and March 31, 2026 but in the next few weeks, we would commence the process.
Our applications are at Security and Exchange Commissions for approval, and I believe they will look at it, in few weeks, UBA will start. And UBA is positioned quite strongly to meet that recapitalisation mandate.
What is UBA’s long-term strategy for expanding its presence in the USA and market share?
We have an aspiration in UBA to be top three in any geography where we have a presence. And the way we want to increase the market share clearly will be more organic growth. We want to grow organically. However, if we have the opportunity for inorganic growth, why not.
Tell us the number of trade facilitated by UBA between Africa and the USA
The truth of the matter is, there are several investors from the United States who are interested in Nigeria. Recently, we’ve seen some of the monetary policies that the Central Bank has put in place have encouraged a lot of foreign direct investment and foreign portfolio investment into Africa, and a lot of those foreign portfolio investments go to UBA and a lot of some of the foreign direct investments are also coming to UBA.
We are pushing strongly to support the financial services institutions in Africa to be able to be served as a correspondent bank to do transactions and settlements within the United States of America
How is UBA sustaining good operational results amid a challenging environment in Nigeria?
Nigeria is a country that has over 200 million people with a GDP of over $400 billion. UBA keep in mind that we are present in 24 countries, and over 60 per cent of our revenue comes outside Nigeria. So, the results we release are the core revenue from the core business of UBA and that revenue would continue to grow.
We saw opportunities in Africa early enough, and we have gone into Africa and invested. Today, Africa is contributing around 70 per cent and those markets are really growth markets.
So, it is not necessarily about Nigeria for UBA, it is a lot more about Africa and the International Bank. Today, the event where we are witnessing is co-sponsored by UBA America, and they are doing quite well here.
How successful would your rights offer be given the high interest rates environment?
Anyone who’s buying UBA shares is buying businesses in 24 countries; you are buying a very diversified portfolio. So you are not concentrating on the issues in Nigeria, which can change in a few months. The high interest rate regime mentioned can change in the medium term in Nigeria. But UBA is in 24 countries, a piece of the share is a piece of businesses across the 24 countries.
What should customers expect from UBA in the medium to long term?
We have been in Africa for a long time. UBA is not just about banking; UBA is about changing the lives of Africans. As we do that, as we push ourselves to change the lives of Africans, we will clearly going to generate revenue and will keep paying good dividends and we will keep actually making sure that our customers are getting the best of services through the technology that we are deploying and through the various markets and products we will be producing.
