Investing in UBA shares means owning stake in business across 24 Countries – Alawuba

UBA America, which is 40 years in America, is a settlement bank for so many banks out of Africa, Oliver Alawuba, UBA’s group managing director/CEO, shares insight at the just concluded annual meetings of the International Monetary Fund (IMF)/World Bank in Washington D.C. Excerpt by Hope Moses-Ashike

Can you tell us about your experience so far in Washington?

So far, the World Bank and IMF meetings in Washington have been positive for Nigeria. Yesterday, we attended a session where Nigeria’s Minister of Finance and the Central Bank Governor engaged with a number of investors, discussing the nation’s journey and the reform progress made. It was an excellent opportunity to highlight the economic reform efforts under the current administration, and the atmosphere was encouraging. From the banks’ perspective, we had the chance to add our voices to reinforce the message. While it’s true that conditions are challenging in Nigeria today, we’ve observed real improvements, and investors are noticing these changes as well. This shift is bringing renewed confidence to Nigeria’s economic outlook.

How does the bank differentiate itself from other financial institutions in terms of offerings and customer experience?

For UBA, our footprint across 24 countries, including key financial centres such as the United States, is a testament to our commitment to connecting Africa globally. We’re enabling Africans to connect with one another through seamless transactions, payments, and capital flows. Customer experience is central to UBA’s philosophy; everything we do is customer-focused. We approach our business from the customer’s perspective because they are the core of our operations. For us, Africa is not only our home but also a dynamic frontier market, and we remain dedicated to advancing its growth through excellent customer service.

Can you speak about your operations in the USA?

We are proud to say that UBA is the only African-origin bank present in the United States, holding a national banking license regulated by the Office of the Comptroller of the Currency (OCC). This position is strategic for us as it enables us to facilitate payments and settlements for businesses that either originate in Africa or are involved in trade between Africa and the rest of the world.

UBA America has now been in the United States for 40 years and serves as a settlement bank for numerous banks across Africa. It has historically been challenging for African banks to establish correspondent banking relationships in the U.S., but UBA America has successfully filled this role. Additionally, UBA America works with many central banks, acting as a trusted banking partner and reserve bank for these institutions due to our deep understanding of the African business landscape.

Read also: Interview with Sola Yomi-Ajayi, CEO of UBA America

With UBA’s foreign operations, how do you mitigate risks associated with currency fluctuations?

Given our presence in numerous countries, we have access to foreign exchange across diverse markets, which helps us mitigate currency risks. Economic downturns rarely affect all these markets simultaneously, allowing us to maintain a diversified portfolio. This global presence enables us to optimize foreign exchange resources efficiently across the various countries where we operate, ensuring resilience and stability in our currency management strategy.

Regarding the recapitalization of the banking sector, are you planning to acquire banks unable to meet recapitalisation requirements, and what are your plans?

The recapitalisation exercise provides four options: a public offer, rights issue, acquisition and merger, or reducing authorisation. For UBA, we have ruled out both acquisition and merger. UBA plans to raise the capital independently, with the deadline set for March 31, 2026. We are set to begin this process in the coming weeks.

Our applications are currently with the Securities and Exchange Commission for approval, and we expect their review shortly. Within a few weeks, UBA will start its capital-raising efforts, and we are strongly positioned to meet the recapitalization requirements.

What is UBA’s long-term strategy for expanding its presence and market share in the USA?

UBA aspires to rank among the top three in each market where we operate. Our strategy for increasing market share will primarily focus on organic growth. However, if opportunities arise for inorganic growth, we are open to exploring them.

Can you discuss the level of trade UBA is facilitating between Africa and the USA and the nature of these businesses?

The fact is, that many investors from the United States are interested in Nigeria. Recent monetary policies by the Central Bank of Nigeria have fostered significant foreign direct investment (FDI) and foreign portfolio investment (FPI) in Africa. A substantial portion of this FPI is directed to UBA, alongside a growing number of FDIs. We are actively working to support financial institutions in Africa, enabling them to function as correspondent banks for transactions and settlements with the United States.

Your recent results were commendable. How did you achieve this?

Nigeria is home to over 200 million people and boasts a GDP exceeding $400 billion. At UBA, we are proud to be present in 24 countries, with more than 60 percent of our revenue generated from operations outside Nigeria. The results we publish reflect the core revenue from UBA’s fundamental business activities, and we anticipate that this revenue will continue to grow.

We recognised the potential in Africa early on and have made significant investments across the continent. Currently, Africa contributes approximately 70 percent of our revenue, and these markets are demonstrating strong growth prospects.

Thus, UBA’s focus extends beyond Nigeria; our strategy is heavily centered on Africa and our international banking operations. It’s worth noting that the event we are attending is co-sponsored by UBA America, which is performing exceptionally well in this market.

How successful would your rights offer be given the high interest rates environment?

Anyone investing in UBA shares is effectively purchasing into a business that spans 24 countries, which means you’re acquiring a highly diversified portfolio. This approach mitigates the risk associated with concentrating solely on the economic fluctuations in Nigeria, which can change within a matter of months. While the current high interest rate environment is a consideration, it is worth noting that this situation could evolve in the medium term in Nigeria. By investing in UBA, you are not just buying into one market but are instead acquiring a stake in a network of businesses operating across 24 different nations.

What should your customers be expecting from UBA in the medium to long term?

UBA has a long-standing commitment to Africa. We are not merely a banking institution; our mission extends to transforming the lives of Africans. As we work towards this goal, we expect to generate significant revenue, which will enable us to continue paying good dividends to our shareholders. Furthermore, we are dedicated to ensuring that our customers receive the highest quality of service. We will achieve this through the innovative technology we are deploying and by expanding our offerings across various markets and product lines.