UNION BANK's Public Offer
Union Bank Nigeria Limited's shares went on sale by way of a public offer and rights issue on Wednesday, November 23, 2005. The offer which was initially scheduled to close on December 21, 2005 will now close on January 9 2006, while the rights issue will close on January 17 2006 (Why the extension?).
As most of us know, Union Bank (formerly Barclays Bank of Nigeria) has been one of the foremost banking institutions in Nigeria for several decades. The bank has the largest amount of the savings deposit in Nigeria, second only to First Bank. The bank has also produced solid financial results over the last few years. But are the bank shares currently an attractive buy?
The recent banking consolidation exercise has changed the landscape of the Nigerian Banking Industry. It is essential to analyze Union Bank’s competitive advantage in the post consolidated banking industry as guidance in buying the bank's shares.
Qouting Warren Buffet:
"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors."
So what is Union Bank’s competitive advantage?
These questions are among a very long list of questions an investor should ask in consideration of purchasing Union Banks Shares.
As most of us know, Union Bank (formerly Barclays Bank of Nigeria) has been one of the foremost banking institutions in Nigeria for several decades. The bank has the largest amount of the savings deposit in Nigeria, second only to First Bank. The bank has also produced solid financial results over the last few years. But are the bank shares currently an attractive buy?
The recent banking consolidation exercise has changed the landscape of the Nigerian Banking Industry. It is essential to analyze Union Bank’s competitive advantage in the post consolidated banking industry as guidance in buying the bank's shares.
Qouting Warren Buffet:
"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors."
So what is Union Bank’s competitive advantage?
- It is absolutely no secret that the bulk of Union Banks clients are pensioners and baby boomers. What plans or strategies are being implemented by Union Bank to target the younger generation -key drivers of the banking business in years to come?
- Pre- Consolidation, Union Bank’s major competitive advantage had to do with its size. Post Consolidation will Union Bank be much larger than its competitors?
- Has Union Bank produced commendable return on capital compared to its peers and will it do so in the new dispensation?Avg Return on Equity over three years - First Bank : 33% , Union Bank : 22%, Zenith : 30%
These questions are among a very long list of questions an investor should ask in consideration of purchasing Union Banks Shares.
posted by Goldtruck at 1:14 AM
3 Comments:
PLEASE I HAVE SEARCHED FOR THE ROLE OF UNION BANK OF NIGERIA IN THE CONSOLIDATION EXERCISE BUT I COULDN'T FIND IT. CAN YOU HELP ME WITH IT? PLEASEEEEEEEEEEEEEEEEE.
(marnexy@yahoo.com or ja.praise@gmail.com)
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