United Bank Shares Attract Nine Times Par Value

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.