Sink or Swim: Can Yetunde Oni Rescue Union Bank?
Yetunde Oni’s appointment as Managing Director and CEO of Union Bank of Nigeria was met with high expectations, given her impressive 25-year track record in banking and reputation for dynamic leadership. However, the optimism has been short-lived, as Union Bank struggles to meet the Central Bank of Nigeria’s recapitalization deadline, leaving stakeholders anxious about the bank’s future. Despite Oni’s credentials, including an Economics degree from the University of Ibadan and an MBA from Bangor University, the bank’s inability to secure a suitor or meet the deadline has dashed hopes for a turnaround.
Truly, when She took the helm, Union Bank was still facing significant headwinds, including a tumultuous acquisition by Titan Trust Bank, regulatory scrutiny, and a competitive banking landscape. Union Bank of Nigeria was in a precarious position before Yetunde Oni took the helm. The bank’s merger with Titan Trust Bank had just been completed, but it was done amidst controversy and regulatory intervention. The Central Bank of Nigeria had dissolved the previous board due to concerns over debt-funded acquisition, leaving the bank with significant challenges. With a capital shortfall of N51.9 billion to meet the CBN’s minimum requirement, impairment charges skyrocketing by 1208% to N58.5 billion, and a hefty N226 billion FX revaluation loss, the bank’s financial health was fragile. The appointment of Yetunde Oni as MD/CEO was likely a move to turn the ship around, but the task ahead was daunting, to say the least.
The question analysts were asking then still remain : Can she leverage her expertise and leadership prowess to navigate these choppy waters and deliver the turnaround stakeholders are eagerly awaiting, or will the weight of Union Bank’s challenges prove too much for even her formidable skills?
Today , nothing spectacular has changed, and this may not spring any surprise . Turning around a bank like Union Bank is not for a dilettante not for merely intellectually curious but for those not content to follow, who desire to rewrite the rules of the game ,unafraid of orthodoxy, more inclined to build than to cut , those concerned to make the difference than making career and those who absolutely committed to staking out the future first.
Union Bank today remains partly a laggard , partly a distressed bank .To understand the position of a company in an industry is not difficult: look at the high-profile initiatives that have been launched recently, issues that are preoccupying senior management, the criteria and benchmarks by which progress is being measured, the track record of new business creation, the dreams and fears on the faces of employees, and the company’s ability to shape that future and regenerate success again and again in the years and decades to come.
From the above perspectives , Union Bank, under the leadership of Yetunde Oni, presents a concerning case of a company devoting too much energy to preserving the past and not enough to creating the future. As the banking landscape undergoes seismic shifts, Union Bank’s senior management seems more focused on reengineering core processes than regenerating core strategies, leading to its stagnancy .
A glance at the bank’s initiatives reveals a plethora of projects aimed at improving operational efficiency, but few that suggest a clear vision for the future. The bank’s track record on new business creation is uninspiring, and its influence on setting new industry standards is negligible. It’s a company that’s more rule-taker than rule-maker, more focused on catching up with competitors than building advantages new to the industry.
Senior management’s attention is absorbed by reengineering core processes, while regenerating core strategies takes a backseat. This defensive approach is reflected in the bank’s transformation agenda, which seems driven more by competitors’ actions than its own unique vision of the future.
The emphasis on cost-cutting is palpable, but what’s lacking is a clear point of view on where the next wave of growth will come from. Union Bank’s improvement efforts are geared towards catching up with competitors, rather than setting new industry benchmarks. It’s a company that’s more focused on maintaining the status quo than challenging it.
If Yetunde Oni and her team gaze into the future, they would do well to ask themselves: what’s the balance between hope and anxiety in our company? Is it a sense of opportunity or vulnerability that’s driving our decisions? The answers might just reveal a company that’s stuck in the past, blind to the future it’s creating. Senior managers of Union Bank might be claiming they’re focused on the future, but their actions tell a different story.
The leadership of Union Bank faces a daunting task: turning the bank around requires more than just incremental changes, it demands a fundamental shift in focus towards shaping the future. Are Yetunde Oni and her team investing enough time and energy in preparing for tomorrow, or are they stuck optimizing yesterday’s success? The questions are stark: what new core competencies will they build, what new product concepts will they pioneer? The answers lie in looking outward, understanding the bigger picture, and thinking long-term. But are they spending enough time doing just that – and crucially, are they building a shared view of the future with their team?
The answers often paint a sobering picture. No doubt , leaders of Union Bank are stuck in a cycle of reacting to the present, rather than shaping the future. They spend a fraction of their time peering over the horizon, and an even smaller sliver building a collective point of view about what’s next.
This lack of focus on the future is a major risk, as it leaves companies vulnerable to disruption and unable to capitalize on emerging opportunities. Developing a clear, distinctive point of view about the future requires a significant investment of senior management’s time and energy. It’s not a one-time task, but an ongoing process of refining and adjusting as the future unfolds.
This is not to say its leaders are lazy. In fact, analysts believed most of them are working harder than ever, with stress and burnout a constant companion. But the problem is that these questions challenge the very foundations of their power and expertise. They force these leaders to confront the possibility that their knowledge and experience may be irrelevant or even wrong-headed for the future.
This is why restructuring and reengineering often take the center stage of the operations .of both the past and the present leadership of this bank These tasks are tangible, actionable, and safe. But they only allow leaders to focus on optimizing the present, rather than confronting the uncertainty of the future and comes at a cost. By neglecting the future, companies risk being left behind, stuck on a treadmill of declining margins and profits.
The real challenge for leaders is to find the intellectual energy to tackle the tough questions, to imagine and create the future, rather than just optimizing the past. It requires a willingness to be vulnerable, to admit uncertainty, and to challenge their own assumptions. The future belongs to those who are brave enough to question the present.
The fall of the old Union Bank could be partly linked to the above attitude. However , Union Bank is not alone. The past few decades have witnessed the downfall of once-mighty companies, their dominance eroded by the relentless tide of industry change. Sears, General Motors, IBM, and others were giants of their time, but their inability to adapt to shifting landscapes has left them struggling to stay relevant. They coasted on past successes, relying on linear extrapolations of growth, and were managed, not led; maintained, not innovated. The signs of disruption were there, but leaders cling to assumptions, unwilling to challenge their own beliefs and adapt.
The result is a painful reckoning, with restructuring and downsizing becoming the norm. These measures address symptoms, not the disease – a failure of imagination, a lack of willingness to reinvent and reimagine the future. Companies must challenge assumptions, innovate, and lead to survive. Those that fail will be left on the roadside, relics of a bygone era. The future belongs to those brave enough to shape it
But this attitude may not be farfetched . Leaders facing stagnant growth often find themselves caught between a rock and a hard place, forced to make tough decisions to boost Return on Investment (ROI). In such circumstances, cutting costs and assets might seem like the most viable option, especially when the pressure from shareholders is intense. This approach, often referred to as the denominator route, can provide a quick fix, making the company look leaner and more efficient, and giving shareholders a short-term win. On the other hand, focusing on growing revenue and profits, known as the numerator route, requires a more nuanced approach, involving innovation, investing in new capabilities, and driving growth, which can lead to more sustainable returns.
However, the denominator route is often preferred due to its ease of execution and desire for immediate results, rather than a thoughtful strategy for sustainable growth. Be This appears to be the choice that is attractive to the Union Bank leadership , both past and present .
The limitations of this approach are evident: it disrupts lives, destroys communities, and undermines future growth. Denominator management is a short-term game that can lead to a loss of competitive edge, innovation capacity, and talent. Leaders who prioritize cost-cutting over growth risk sacrificing long-term success for short-term gains.
The challenge is to strike a balance – cutting costs where necessary while investing in growth where possible. However, this requires leaders to take a long-term view, invest in uncertainty, and trust their people to deliver, which can be daunting, especially when faced with intense pressure for immediate results.
Instead of going for the balancing act , Union Bank’s leadership has embarked on a harvest strategy, prioritizing cost-cutting over growth and innovation. While this approach may have yielded short-term gains, it’s a recipe for long-term pain. By slashing costs and assets, the bank may have boosted productivity and profits, but it’s likely to undermine its ability to innovate, adapt, and grow. The consequences are already evident: a weakened competitive edge, loss of talent, and a diminished capacity to invest in new capabilities. It’s a classic case of prioritizing short-term shareholder value over long-term sustainability
Union Bank’s restructuring efforts, aimed at boosting efficiency and cutting costs, may have yielded short-term gains, but they risk undermining the bank’s long-term growth and prosperity.To truly succeed, the bank needs to look beyond reengineering and focus on building new capabilities, creating new markets, and driving innovation. It’s time for Union Bank to take the leap and prioritize numerator growth – investing in innovation, expanding into new markets, and building new capabilities – rather than just focusing on short-term cost-cutting measures .
Unfortunately, the leadership believed everybody is gullible, beating her chest and flaunting its miserable 2024 results. The leadership under Yetunde Oni, is especially gratifying to see the bank’s hard work paying off. With a 58% increase in gross earnings and a 20% growth in profit before tax, we’re delivering value to our stakeholders. Our strategic priorities, centered around scaling our digital play and driving hypergrowth in target sectors, are yielding results. The launch of our digital lending platform, UnionKash, has been a huge success, with over 14,000 customers accessing soft loans. We’re committed to maintaining strong governance frameworks, ensuring regulatory compliance, and driving sustainable profitability.
“At the beginning of the year, our top priority was to keep the momentum going with a strong focus on stability following the intervention of the Central Bank of Nigeria. We also continued with the planned strategic priorities, which are centred around scaling our digital play, driving hypergrowth in target sectors, optimising our wholesale bank structure, aggressively ensuring recoveries of past-due obligations, and orchestrating a robust ecosystem play through existing and new partnerships
The Acting Chief Financial Officer, Oluwagbenga Adeoye, noted that our H1 2024 financial performance is a testament to the bank’s resilience, given the challenging economic environment. We’ve navigated inflation, exchange rate volatility, and increased operational costs to deliver a strong performance. Our cost-to-income ratio remains below 50%, and we’re confident in our ability to sustain positive momentum.
However, a closer look at the numbers reveals some concerning trends. Non-interest income has declined by 3%, while operating expenses have ballooned by 52%. The bank’s net income plummeted to ₦44.798 billion in 2024, a 32.4% decrease from ₦66.292 billion in 2023. Earnings per share have also taken a hit, dropping to ₦1.53 from ₦2.27 in 2023. These declines raise concerns about the bank’s profitability and shareholder value.
The Central Bank of Nigeria’s intervention and the ongoing recapitalization efforts add to the uncertainty. Union Bank’s recapitalization strategy hinges on prospective foreign investment, but a lingering legal dispute involving former core investor, TGI Group, clouds the process. The bank’s ability to address asset quality concerns, optimize costs, and drive strategic growth initiatives will be crucial in determining its future success.
As the CBN’s recapitalization deadline looms, Union Bank’s challenges are far from over. The bank’s leadership must take decisive actions to address these concerns and drive sustainable profitability. With the stakes high, Union Bank’s future hangs in the balance
