FORTUNE+ VIDEO JOBS SPONSORED CONTENTS FORTUNE AUDIO TRADE AFRICA new

COVID-19 UPDATES: All the stories and commentaries on Coronavirus, in one place


United Bank Shares Attract Nine Times Par Value

The bank grabbed as high as 17 times par value in previous auctions

March 16 , 2019
By FASIKA TADESSE ( FORTUNE STAFF WRITER )

United Bank received offers nine times the firm's par value, pulling in the highest bid of 1,027 Br a share in the latest auction held by the Bank.

United offered 1,659 shares, which sold during the auction at the headquarters of the Bank on March 4, 2019. The shares have a par value of 100 Br.

During the latest round, 15 shares were purchased at a nine-fold offer by three siblings - Konjit Ayfokiru, Netsanet Ayfokiru and Tigist Ayfokiru. Two other bidders offered 1,006 Br for four shares and a single share, the second highest offers.

The Firm auctioned the shares two and a half years after the central bank ordered all private banks and insurers to return share certificates held by non-national shareholders and auction off the shares for public subscription. The Central Bank has also stated that the amount of money offered above par value has to go to the national treasury.


Following this instruction of the governing bank, United auctioned shares that generated close to half a million Birr. Close to two-thirds of the total will go to the national treasury.

The offer price shows at buyers highly overvalued shares of the bank, according to Abdulmenan Mohammed, an accounts manager at Portobello Group Ltd, in London, United Kingdom.


"If we take the latest earnings per share of the Bank, 35.4 Br, the buyer would enjoy less than 3.5pc return per annum, which is half the bank interest rate," Abdulmenan said.

Commercial banks have been paying seven percent interest rates on deposit since last year, when the rate was increased by the central bank from five percent to encourage domestic savings.


When other deductions such as legal reserves and dividend taxes are taken into account, the return to the buyer would be much smaller, according to the expert.

With the current highest offer, the payback period will be 43 years based on a dividend per share of 24 Br, deducting 25pc for legal reserve and 10pc in taxes from last year's shareholder return. United, which was established in 1998, has declared a 50pc growth in its net profit, recording 573.6 million Br last financial year.

“A reasonable valuation would give us a share value of a fifth of what is offered,” said Abdulmenan.

In the last round of auctions, the Bank received high offers of 1,012 Br and 1,700 Br per share in two different auctions.


A year and a half ago, the Bank was taken to court as a co-defendant with United Insurance and the National Bank of Ethiopia for charges brought by Sophia Bekele, an Ethiopian native with American nationality. Sophia charged that she has lost shares of United Bank and United Insurance inherited from her late father by the central bank's directive.

However, this seems to be changing as the government is crafting a law that will enable the diaspora to hold shares in the financial industry.

"The bill is drafted and will be tabled to the relevant legislating body soon," Yinager Dessie (PhD), governor of the National Bank of Ethiopia, told journalists at the end of last month.


PUBLISHED ON Mar 16,2019 [ VOL 19 , NO 985]

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.



Related Posts

Put your comments here


Editors' Pick

Editorial

Financial Sector-sourced Glucose Drips No Remedy to Save Economy

November 27 , 2021

Against my will, I have witnessed the most terrible defeat of reason and the most sa...

Editorial

Contingency Economic Plan Necessary to Reconcile with Political Storm

November 13 , 2021

Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...

Agenda

Banks Miss Deadline, Mergers Prove Unattainable

October 16 , 2021 . By HAWI DADHI

Residing in a country with no capital market, an organised marketplace for trading se...

Agenda

Property Market Grinds to Halt

August 28 , 2021 . By HAWI DADHI

The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...

Commentaries

The Missed Opportunity for Effective CSR Regulation in Ethiopia

The terms corporate accountability, corporate ethics, corporate citizenship, corporat...

The Power and Poison of MMT

When Democratic Senator Joe Manchin announced that he would not support US President Joe Biden’s Build Back Better Act – effectively doo...

Fineline

Leaders of the National . . .

Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...

When the country’s most. . .

When the country’s most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or tw...

Editorial

Peace Process within Arm's Reach. Beware Spoilers!

January 15 , 2022

Foes and friends of Prime Minister Abiy Ahmed (PhD) agree that his administration is...

It`s Not Too Late to Thwart Economic Calamity

January 7 , 2022

There has not been much research to put a number on high costs wars inflict on Africa...

Ethiopia: May the New Year Usher Security, Opportunities!

January 1 , 2022

It is a norm to emphasise grand structural changes to address the myriad political pr...

Older Folks May Be Looking to Negotiate. They Need All Help They Can Get!

December 25 , 2021

In the words of Herbert Hoover, the 31st president of the United States, it is older...

Gallery

Parliament Approves New Cabinet Members

October 6 , 2021

Parliament Approves New Cabinet, Incorporates Opposition Leaders Lawmakers have approved today the nominations of 22 ministers, including three opposition leaders. Two MPs have voted against, while 12 abstained...

2020 in Posterity

January 5 , 2021

TIGRAY VOTES DESPITE "NULL & VOID" THREAT

September 9 , 2020

IN-PICTURE: LAUREATE'S RECEPTION  

December 14 , 2019

PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize

May 6 , 2019

Faces, Voices of Addis Abeba

April 26 , 2019

Sunday With Eden

Prejudice's Externalisation of Self-Hate. Better to look Inside

I lived in Tanzania some time ago, working on a project. I met new people who came f...

Saddened One Moment, Triumphant Another, Physicians Dare to Care

There is a huge smile on every patient's face as the physicians at Saint Peter’s Sp...

Life Matters

Right Order Comes Down to Pen, Paper

In many high school and college movies, it is not hard to find characters doing part...

Price of Loyalty Shouldn't be Social Ill

I am often accused of taking sides with the underdog. Perhaps I feel they deserve it...

Drop us a message

Or see contact page