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OPIC Board Approves $250 Million in Financing for Union Bank

By on September 23, 2011

The Board of Directors of the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, today approved $250 million in financing for two American firms helping to revitalize a major Nigerian bank, a project that will result in better management and new technology to enable the bank to reach unbanked segments of the Nigerian population.

Union Bank of Nigeria (UBN) was one of eight banks to receive a capital injection from the Central Bank of Nigeria (CBN) following the global financial crisis in 2009. In early 2010, the CBN auctioned the right to recapitalize and restructure the banks; a consortium of investors that includes the American sponsors, African Capital Alliance and ABC Holdings won the bid to recapitalize UBN on the basis of a plan to improve its corporate governance, risk management, credit standards and customer service.

The U.S. sponsors, Keffi Group Ltd. and Discovery Global Citizens Capital Partners, and their consortium partners will use the OPIC financing to introduce new financial products, including mobile banking technology that will enable UBN to reach unbanked segments of the population, thereby increasing the availability of credit in Nigeria.

The project will establish an objective performance evaluation system to create opportunities for advancement, identifying needed training and tying staff performance to rewards. It will also create a Union Bank Academy to provide in-depth training in customer service, credit analysis and risk management; and an institutional support office to act as a resource pool for bank management for specialized banking such as foreign exchange management, agricultural credits, factoring and other specialized skills.

“With the participation of its experienced investment team, this project will encourage the adoption of best international practices of corporate governance; increased transparency; strengthened credit and risk management procedures; and improved customer service, through the participation of an experienced investment team,” OPIC President and CEO Elizabeth Littlefield said. “In doing so, the project reflects Nigeria’s serious commitment to reform its banking sector and restore investor confidence.

“Union Bank of Nigeria serves close to a million depositors and hundreds of businesses — many of them small businesses — so the more efficient and profitable UBN becomes, the better able it is to fuel economic growth in Nigeria,” Ms. Littlefield said. “We are particularly pleased that the project will result in greater availability of credit to ordinary Nigerians.

UBN, founded in 1917, is the fourth largest bank in Nigeria based on deposits, and the sixth largest based on total assets. It has more than 400 branches throughout the country

The Keffi Group Ltd. is a private investment firm based in New York City and founded by Jide Zeitlin, a former partner and Global Chief Operating Officer of Goldman Sachs’ investment banking businesses. Discovery Global Citizens Capital Partners is an investment vehicle established by Discovery Capital, a U.S.-based hedge fund manager.

OPIC is the U.S. Government’s development finance institution. It mobilizes private capital to help solve critical world challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.

Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. OPIC services are available for new and expanding business enterprises in more than 150 countries worldwide. In addition, OPIC has accomplished its developmental mission by supporting $200 billion worth of investment in nearly 4000 projects in developing countries and emerging markets.