UBA in Dubai: We are futuristic, says Tony Elumelu

I’m seated at a dinner in faraway Dubai pondering as the Chairman of United Bank for Africa gave the opening remark for the launch of UBA Dubai.

It’s a landmark event as it positions UBA as one of the leading Nigerian and indeed African banks when it comes to having a global footprint.

Regional and global trade will surely dominate how businesses are conducted in the next few years and it’s not difficult to see what UBA is trying to achieve here.

As I ponder, my thoughts gravitate to what this latest move could mean for the bank’s shareholders. Why Dubai, I thought? I decided to ask GMD/CEO, Kennedy Uzoka why the bank was making this bold move in the Middle East.

There he was seated two tables away browsing on his phone as an entertainer serenaded guests with soothing jazz music.

As soon as we were done with the pleasantries, I quickly asked him why UBA was expanding into Dubai and what the actual play was. The questions sounded rhetorical, but Uzoka knew where I was getting at.

“Ugo, it’s a global trade for us. UBA is thinking about the future and believes having a hub in the heart of the Middle East was key to connecting businesses and trade from the US, Europe, Asia, and Africa. Every business needs a financial institution to serve as the connection between importers and exporters and we want UBA to be the bank of choice for trade with Africans.”

UBA currently has an outlet in the US, UK, France and so adding Dubai to the mix was a logical next step for the bank which styles itself as not just a Nigerian-owned bank but a pan-African bank.

“With this new hub, we can facilitate trade for customers looking to trade across continents offering a seamless interconnectivity that is very valuable for doing business,” Mr. Uzoka explained.

This has been UBA’s play for years, and they have gradually executed riding on its pan-African theme. But opening branches or subsidiaries is not always profitable and even when it is, it can take years to materialize. And so I posed this question to the bank’s CFO, Ugo Nwaghodoh.

Will this new branch deliver profit for shareholders of the bank? Nwaghodo, posit he expects the branch to be profitable in about 6 months.

“The overhead for this branch is very low because most of the operations will be driven from the head office in Lagos. The Dubai office will be manned by a CEO and three to four other staff, so the cost of the operations will be very little compared to the value we hope to get,” he said.

Nwaghodoh was coy on what the projections were for this branch but he adamantly insists it will be a profitable and valuable addition to the bank. UBA’s share price has struggled to reflect the intrinsic value evidenced by its fundamentals and Nwaghodoh is mindful of this.

“Our approach is to build and execute sustainably. We are confident we will keep creating value for investors,” he adds.

The mood across the hall where the event was taking place reflected how excited the entire UBA leadership team who attended the event was about this new branch opening. It was easy to comprehend just how important this new branch in the gulf is to the bank. It was also clear it was not an easy one considering the strict regulatory approvals required to set up a financial institution in Dubai. It was also easy to guess this was not going to be the last of the global expansion for UBA.

Are we going to see UBA open in Singapore, or Hong Kong I asked Nwaghodoh? “You don’t expect me to reveal this to you right?” he retorted.