Rating action
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). Concurrently, GCR has placed Union Bank of Nigeria Plc’s NGN6.3Bn 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.
| Rated Entity/Issue | Rating class | Rating scale | Rating | Outlook |
| Union Bank of Nigeria Plc | Long Term Issuer | National | BBB+(NG) | Rating Watch Negative |
| Short Term Issuer | National | A2(NG) | ||
| Union Bank of Nigeria Plc NGN6.3Bn Series 2 Senior Unsecured Bonds | Long Term Issue | National | BBB+(NG) | Rating Watch Negative |
Rating Rationale
The ratings action follows the announcement of the dissolution of the Board and Management of three banks, including Union Bank of Nigeria Plc (Union Bank or the bank) by the Central Bank of Nigeria (CBN) on 10 January 2024 as a result of 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.
While investigations by the CBN are ongoing, it is likely that our assessment of management and governance may weaken (dependent on the outcome of the investigations), and some financial ratios deteriorate.
GCR will take appropriate further action once additional information is received and the impact of the development becomes clearer.
Rating Triggers
A downgrade could stem from:
1) identified weaknesses in bank’s corporate governance which could negatively impact our assessment of management and governance
2) a deterioration in the financial position of the bank on account of the imposition of regulatory fines by the CBN, restrictions in the activities of the bank or funding instability.
Ratings History
Union Bank of Nigeria Plc
| Rating class | Review | Rating scale | Rating | Outlook | Date |
| Long Term Issuer | Initial | National | BBB+(NG) | Stable | June 2015 |
| Short Term Issuer | Initial | National | A2(NG) | June 2015 | |
| Long Term Issuer | Last | National | BBB+(NG) | Rating Watch Evolving | September 2023 |
| Short Term Issuer | Last | National | A2(NG) | September 2023 | |
Union Bank of Nigeria Plc NGN6.3Bn Series 2 Senior Unsecured Bonds
| Rating class | Review | Rating scale | Rating | Outlook | Date |
| Long Term Issue | Initial | National | BBB+(NG) | Stable | January 2019 |
| Long Term Issue | Last | National | BBB+(NG) | Rating Watch Evolving | September 2023 |
Salient Points of Accorded Rating
GCR affirms that:
a.) no part of the rating process was influenced by any other business activities of the credit rating agency;
b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; and
c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument.
The credit ratings have been disclosed to Union Bank of Nigeria Plc. The ratings above were solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the ratings.
Union Bank of Nigeria Plc participated in the rating process via email correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible. The information received from Union Bank of Nigeria Plc and other reliable third parties to accord the credit ratings included:
- The audited financial results to 31 December 2022
- Four years of comparative audited numbers
- Other related documents
