Union Bank sheds N247.9bn for deficit write-off

Subject to the confirmation of the Federal High Court, the shareholders of Union Bank Plc have tentatively approved the reduction of its surplus capital to help it write off N247.9billion deficit in its general reserve.

This is coming on the heels of the greenlight given its management to also commence the N50billion rights issue during this second quarter of the year.

Presented as a special resolution before the shareholders at its 48th Annual General Meeting Wednesday in Lagos, the 100-year old bank said it intended to reduce the N391.641billion in its share premium account by N247.9billion to fund the deficit in its general reserve.

The resolution read: “That subject to the confirmation of the Federal High Court, the sum of N391.641billion standing to the credit of the company’s share premium account be  reduced by N247.868billion,  and the proceeds of the reduction(special reserve arising from the reduction) be applied in writing off the deficit of N247.868 billion in the company’s general reserve as at December 31, 2015”.

Share premium, also called capital surplus, according to Wikipedia, is an account which may appear on a corporation’s balance sheet, as a component of shareholders’ equity, which represents the amount which the corporation raises on the issue of shares in excess of their par value (nominal value) of the shares (common stock).

Its Chairman, Mr Cyril Odu, also used the occasion to present the bank’s 2016  financials to the investors.

“The bank recorded a profit after tax (PAT) of N15.4billion on gross earnings of N126.6 billion for the financial year ended December 31, 2016. Compared with a PAT of N14.3 billion on gross earnings of N117.2 billion in the corresponding period of 2015, this represents a growth of eight per cent in net profit and in earnings respectively,” he said.

On the proposed rights issue, the Managing Director of the bank, Emeka Emuwa, said the bank has started necessary steps to launch it any time before the end of this quarter.

His words: “Following shareholders’ approval in December 2016 at the Extra General meeting, we plan to move full stream ahead on the rights issue expected to raise N50 billion in capital to finance our growth strategy. We have since commenced all necessary steps for a successful rights issue and expect to launch by the second quarter of the year.”