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Unity Bank sells bad loans, seeks to raise 270B naira

Nigeria-based Unity Bank PLC sold 400 billion naira worth of bad loans and is seeking to raise about 270 billion naira to strengthen its capital buffers, Bloomberg News reported Sept. 4.

The disposal of bad loans to Frontier Capital Alternative Asset Ltd. slashed the ratio of nonperforming loans to near zero from almost 50% and helped to shore up the bank's liquidity, CFO Ebenezer Kolawole told Bloomberg.

The bank is also trying to conclude talks for a cash injection after missing a regulatory deadline in 2017 to boost the amount of cash it sets aside as a buffer against potential shocks. The report came after New York-based private equity fund Milost Global Inc. in March reportedly ended talks to inject $1 billion into Unity Bank.

The Nigerian central bank appointed Unity Bank to administer an 80 billion naira credit facility for more than 300,000 rice farmers, Kolawole said. The bank obtains funding from the central bank at an interest rate of 2% and then lends it onward to the farmers at 9%, he added.

As of Sept. 4, US$1 was equivalent to 360.30 Nigerian naira.