Managing Director of United Bank for Africa (UBA), Phillips Oduoza, yesterday announced a suspension of plans to raise additional capital through issuance of new shares.
This, according to him was because of the weak nature of the capital market at the moment where shares continue to fall on a daily baisis.
“The board and management has suspended our equity capital raising at this point in time pending when capital markets improve,” he told an investors’ conference call.
Oduoza told the call UBA sold close to N100 billion in bad loans to AMCON last year.
The bank on Wednesday issued a profit warming on its 2011 results.
Shares of UBA fell almost five percent for a second straight day as investors dumped the stock following the profit warning.
UBA, which is one of the biggest banks in the country with presence in many other African countries, said on Wednesday it expected to announce a loss for 2011, driven by one-off write-downs against earnings, including loans sold to a state-owned “bad bank” AMCON.
However, the bank said it hoped to make a quick recovery during the first quarter of this year.
The bank had announced plans to raise capital through a private placement and a rights issue to help support large-ticket lending in infrastructure and agriculture sectors in October last year.
“The board and management has suspended our equity capital raising at this point in time pending when capital markets improve,” he told a conference call of investors, a day after the bank issued a profit warming on its 2011 results.
According to the CEO, the bank’s board had earlier approved a N500 billion debt and equity capital raising program to shore up its balance sheet and strengthen its African subsidiaries but that the bank was suspending its share sale because of current weak nature of the capital market.
Filed Under: Business News