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Credit institute raises concerns over TUC-Unity Bank deal

By Tope Templer Olaiya
01 July 2016   |   1:36 am
Following the recent announcement by the Trade Union Congress (TUC) to invest N80 billion in Unity Bank Plc, the Institute of Credit Administration (ICA) has expressed worry over the prospect.
Unity Bank

Unity Bank

Following the recent announcement by the Trade Union Congress (TUC) to invest N80 billion in Unity Bank Plc, the Institute of Credit Administration (ICA) has expressed worry over the prospect.

The TUC through its consultant, Black Tritium Capital Management Limited, an equity and investment fund manager recently signed a deal to invest N80 billion in Unity Bank Plc within the next three years and subsequently acquire 57 per cent equity holding, thus making it the majority shareholder of the financial institution.

But reacting to the development, the Registrar/Chief Executive Officer of ICA, Prof. Chris Onalo, raised a red flag on the prospect, which he described as disturbing to the economy and the banking sector.

“The proposed $80billion deal is both a mixture of good and bad news. To Unity Bank, the new stream of investment will obviously help to shore up its capital base to an appreciable level but there is more to banking than raising capital,” he said.

Justifying reasons why ICA had to raise the red flag over the deal, Onalo said as an institute which tracks credit procedures and processes in all sectors of the economy including the public and the organised private sector, it felt obliged to take a position because the proposed deal is such a significant investment.

While noting that N80bn will give TUC a very strong leading position in the affairs of the bank as a majority shareholder, he was, however, quick to add that judging by TUC’s pedigree it is not certain if it can bring any value addition to the bank. There more negative implications of the deal than there are positives, he stressed.

“The public perception of TUC is not cheery. Consequently, there will be negative perception of the banking public against Unity Bank. This is what Nigerians need to worry about”, Onalo added.

The credit expert, who observed that the details of the deal was hazy, said ordinarily it ought to have been cleared by regulatory agencies in the financial and banking sector, especially the Central Bank of Nigeria.

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