Fitch Ratings has assigned a Rating Watch Negative (RWN) to Union Bank of Nigeria Plc’s (UBN) Issuer Default Ratings (IDRs), Viability Rating (VR), and National Ratings.
The development follows the Central Bank of Nigeria’s (CBN) recent announcement of dissolving the board and management of three Nigerian banks, including UBN, due to regulatory non-compliance and corporate governance failure.
The RWN indicates the uncertainty surrounding the reasons for the CBN’s intervention, potential further regulatory actions, and the negative impact on UBN’s stand alone credit profile.
Fitch aims to resolve the RWN within six months, seeking more clarity on the CBN’s intervention and its implications for UBN’s credit profile.
A downgrade and resolution of the RWN may occur with additional regulatory interventions, such as restrictive measures, fines, or findings affecting UBN’s asset quality, resulting in substantial losses and capital erosion.
Funding instability, such as a deposit run or unavailability of additional liquidity sources, could also contribute to a downgrade.
Ratings affirmation and removal from RWN are possible if UBN operates normally under the new management without further regulatory interventions or adverse financial profile implications.
Meanwhile, the bank has reassured its stakeholders of seamless service in spite of the leadership change.
The bank gave the assurance in a statement on Tuesday in Lagos.
The statement said the appointment of Mrs Yetunde Oni, as its new managing director, was a positive development, expressing confidence in the bank about its future under her leadership.
It noted that the transition to the new Chief Executive Officer would be smooth, adding that there would be no disruption to daily operations.
The bank assured its customers that as a long-standing financial institution in the Nigerian banking industry, it would continue to provide top-quality services and products.
It added that the bank would continue to operate under the best tenets of corporate governance as enshrined within the guidelines of the Central Bank of Nigeria.
