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Union Bank recovers N31bn, liquidity hits 42%, Oshibodu

Union Bank appears to be on its way out of the woods, according to indications.  This is because the bank has recovered N31 billion of the N70 billion that eroded the bank’s shareholders funds that led to the CBN removal of the former management of the bank. Giving an update on the loan recovery efforts of the bank to newsmen in Lagos,  the bank MD, Mrs.

Funke Osibodu, said “the bank has recovered N 31 billion and that the bulk came from Transcorp Plc, which paid N22.1 billion”. Out of the funds recovered from Transcorp, she explained, N600 million was in cash from government, while the remaining was in one year promissory notes, earning interest of 8.6 per cent per annum for the bank.

She said that the debt recovery effort is a joint task between the Economic and Financial Crimes Commission, EFCC, the bank staff and other law enforcement agencies. He said no amount of the recovered funds can directly be attributed to the effort of the EFCC as the recovery is a joint effort. He said some of the recovery were done in the bank’s premises or at the EFCC’s office.

According to her all the money recovered were paid directly into the account of the affected banks as the EFCC has no account to take the recovered funds. She said the inspectorate unit of the bank has all the documentation and the list of debtors that is being used. She disclosed that the huge debt were those the EFCC was involved in while the smaller ones were being handled internally. She said some of the accounts have been restructured to enable the debtors pay as their cash flow improves.

The GMD also revealed that the bank’s liquidity ratio had at different intervals reached a peak of 42 per cent and an average of 26 per cent meaning that the bank can comfortably accommodate its customers needs. The stipulated liquidity ratio for all banks in the country is 25 per cent. It will be recalled that liquidity problem was one of the three criteria used by the CBN to measure the health of the eight troubled banks.

Mrs Oshibodu stated that the cost management strategy embarked upon by the new management of the Bank some two and half months ago is expected to culminate in the saving of N 200 million on purchase of diesel for the head office of the bank over the next one year.

Already, over N 20 million has been saved on diesel for the head office alone and by the time the cost management strategy is extended to other branches of the bank, about N1 billion is expected to be saved in one year.

The management of Union Bank led by Mrs. Funke Osibodu and two of her Executive Directors made these known during an interactive session with the media last Friday.

Executive Director, Operations, Technology and Services, Mr. Adebisi Shonubi, said rather than toe the line of the old order – by buying diesel from distributors, Union Bank has since the new management came on board, been purchasing diesel directly from the importers – thereby reducing costs.

Besides, he noted that about N145million was also saved by the bank for purchase of new computers.
Instead of buying new ones as had always been the case, Shonubi, said the bank had to approach the manufacturers and asked them to refurbish existing ones at N5 million and still achieve same results.

“On the average, we use about two tankers of diesel in this building in a week. We were buying diesel from distributors. Meanwhile, all the people who import diesel into this country have accounts with us.

It meant we were paying more for the diesel than we could have gotten talking to our existing customers who are the direct importers. We would have turned the businesses over in our customers’ account to make them happier with us but we were not doing that.

Immediately we started doing that since August, we have saved over N20 million just on that item and that is on this building. We expect that by the time we roll it out to other branches, and the other cost cutting things that we want to do on the energy alone, we should be looking at about N200 million,” he said.

Shonubi said the institution had a mandate by its Group Managing Director to cut operating expenses by about 30 per cent. Executive Director, Commercial and Retail Banking /Consumer Banking, Mr. Adekunle Adeosun, said an e_mail culture has been instituted to improve on turnaround time. Previously, a customer’s request could take two to three weeks to complete, he said. With the e_mail system however, he said that could be achieved within 24 hours.

“What we have seen or what we have done is to improve turnaround time. Our system is very old_fashioned. A request for customer takes two to three weeks to complete a process.  We are instituting an e_mail culture.

Every staff has an e_mail address, so why we couldn’t use it is just an attitude and leadership thing. We have reinstituted it and the staff are embracing and using it. We are not only cutting costs in terms of cartridge, we are also helping the environment by cutting the use of paper,” he said.

He however, admitted the fact that only 45 to 50 per cent of its Automated Teller Machines (ATMs) were working properly. He said there is an ongoing process to revamp the machines and enhance their uptime, in view of their relevance in modern banking business.

He said there are plans to outsource the distribution of its cheque books, stressing that the online order system has now been put in place. On the alleged face_off between the bank and some labour unions over issues bothering on retirement and retrenchment benefits, the President, Union Bank Association of Senior Staff (UBASS), Mr. Fred Ojeh, who was also in attendance, said the relationship between the union and new management has been cordial.

“The relationship here has been so cordial, I must confess, and if there are grey areas we sit down and talk it over. We support in totality all the actions of the new management to bring the bank back to Eldorado and we hope more will be done. Nobody will picket Union Bank without our say so.

They (another faction of Association of Senior Staff of Banks, Insurance and Financial Institutions _ ASSBIFI) are not representing our interest,” he said. Head, Human Resources, Union Bank, Mr. Mike Iyella pointed out that the bank is committed to engage the union in positive dialogue over any issue that may arise.


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