Fitch Ratings has assigned a Rating Watch Negative (RWN) to Union Bank of Nigeria Plc’s (UBN) Issuer Default Ratings (IDRs), Viability Rating (VR), and National Ratings.
The development follows the Central Bank of Nigeria’s (CBN) recent announcement of dissolving the board and management of three Nigerian banks, including UBN, due to regulatory non-compliance and corporate governance failure.
The RWN indicates the uncertainty surrounding the reasons for the CBN’s intervention, potential further regulatory actions, and the negative impact on UBN’s standalone credit profile.
Fitch aims to resolve the RWN within six months, seeking more clarity on the CBN’s intervention and its implications for UBN’s credit profile.
A downgrade and resolution of the RWN may occur with additional regulatory interventions, such as restrictive measures, fines, or findings affecting UBN’s asset quality, resulting in substantial losses and capital erosion. Funding instability, such as a deposit run or unavailability of additional liquidity sources, could also contribute to a downgrade.
Ratings affirmation and removal from RWN are possible if UBN operates normally under the new management without further regulatory interventions or adverse financial profile implications.