As Unity Bank situation worsens, ENigeria reports that Executive Director, Usman Abdulqadir is positioned to replace Tomi Somefun as CEO.
The festering issue at Unity Bank Plc may not be over yet, as new pressure is being applied to Tomi Somefun, the bank’s Managing Director/CEO, to resign, according to information making the rounds.
This is despite Nigeria’s former president, Olusegun Obasanjo, intervening many times to save Somefun’s job.
Inside sources however revealed that Obasanjo’s last intervention failed as the board has insisted on change in the leadership of the financial house.
Somefun, a pastor of the Redeemed Christian Church of God (RCCG), is alleged to have failed to reform the bank, which is still struggling to stay afloat.
However, we learnt Mr. Usman Abdulqadir, the executive director of Risk Management and Compliance, is being positioned to take Tomi Somefun’s place.
Mr. Abdulqadir, who is thought to be the board’s preferred choice for the role, joined the bank in April 2018 and has extensive financial experience.
He was the Ag. Managing Director/Chief Operating Officer of FMDQ Clear Limited and vice president and divisional head, Post-Trade Services, of FMDQ OTC Securities Exchange Plc till his appointment.
Usman holds a bachelor’s degree in accounting and a master’s degree in Islamic finance from Bayero University in Kano, Nigeria (Durham University, UK). In the year 2000, he was admitted as an associate member of the Institute of Chartered Accountants of Nigeria.
He spent 13 of his almost 20 years in the banking industry at the Central Bank of Nigeria (CBN), where he retired as a principal bank examiner.
Usman worked on a number of projects while at the CBN, including the Islamic Financial Services Board’s Working Group on Liquidity Risk Management and the Project Management Office for the implementation of Nigeria’s new financial stability framework.
Nigeria Banking Sector Consolidation Programme (served on the Implementation Committee); Nigeria Banking Sector Reform Programme (served on the Implementation Committee); (The Project Alpha Team).
Usman founded East Atlantic Advisors Limited, a business consulting and financial advisory services firm based in Lagos, and was the first executive director (chief risk and finance officer) of SunTrust Bank Nigeria Limited.
Unity Bank’s failure to attract suitable investors has been a key obstacle in the institution’s development.
Unity Bank Plc, as reported is in serious need of capitalization if it is to survive the CBN’s hammer.
The bank’s external auditor, KPMG Professional Services, raised a red flag about Unity Bank’s existence in 2019 and 2020, stating that the lender’s total liabilities exceeded its total assets by N279 billion, and the lender failed to meet the required minimum CAR of 10% for a national bank.
According to KPMG, “a major uncertainty exists that may cast significant doubt on the bank’s ability to continue as a going concern.”
Agusto & Co. also assigned the bank a “BB-” rating, meaning that it is junk or below investment grade.
On the other hand, the board of directors has expressed great faith in its ability to preserve the financial institution and get it back on its feet.
Regarding this ongoing issue and the results in the 2020 reporting year, the auditor issued a new warning. Unity Bank only had a pre-tax profit of N2.1 billion in 2018, compared to N3.4 billion in 2019, and its total liabilities exceeded its total assets by N275 billion, compared to N279 billion in 2019, with a CAR of -101.29 percent, down from -200.8 percent in 2019.
“As a result, the bank fell short of the CBN’s minimum capital requirement and the CAR, which is 10% for a national banking licensee. The board of directors understands that the bank’s recapitalization timeline is yet undetermined.
“However, the directors have gone to an advanced stage with both local and foreign investors in the capital mobilization for the bank,” the results indicated.
In the last five years, the financial institution’s performance hasn’t exactly wowed investors, and there have been a few blips here and there, indicating that something isn’t quite right with the bank.
For example, from N13.639 billion in 2014 to N2.342 billion in 2015, the company’s earnings before tax fell by 82 percent. In addition, it decreased by 22% from N2.342 billion in 2015 to N1.816 billion in 2016.
In 2017, the bank posted a loss before tax of N14.243 billion, compared to a pre-tax profit of N1.816 billion in 2016, and a loss before tax of N7.554 billion in its restated results in 2018, but a pre-tax profit of N3.642 billion in 2019, and N2.223 billion in 2020.
A careful examination of the bank’s financial reports for 2020 revealed that the firm has not recovered, as its profit has plummeted due to credit and revaluation losses.
The lender’s profit fell 38% to N2.08 billion from N3.38 billion the previous year.
According to the report of Unity Bank’s independent auditors, KPMG Professional Services, the bank’s total liabilities “exceeded its total assets by N275 billion” as of December 31, 2020, and the bank “did not meet the required minimum Capital Adequacy Ratio (CAR) of 10% and the minimum capital requirement of N10 billion for a national bank as required by the Central Bank of Nigeria.”
According to the findings, the lender’s total assets were N492.0 billion in the period under review, while total assets were N767.4 billion, with a CAR of -101.29 percent.
Earnings per share dropped 38% from 28.9 kobo per share the previous year to 17.8 kobo per share.
Personnel costs increased by 10% to N10.4 billion in 2019 from N9.4 billion, while depreciation of property and equipment fell to N1.69 billion from N1.7 billion in the same period last year.
In 2020, the bank paid N22.1 billion in income tax, down 38% from the previous year’s N 36.2 billion.
Shareholders of the lender are concerned that they may not have enough time to fulfill these lofty targets because the bank needed a N50 billion short-term loan from the CBN to cover working capital requirements last year, and this credit facility is set to expire on September 19, 2021. This loan, along with others, has raised the financial institution’s debt.