Union Bank of Nigeria and BFREE, a pioneering German-Nigerian FinTech company, have solidified a Memorandum of Understanding (MOU) aimed at addressing economic hurdles and revitalizing distressed loan portfolios in Nigeria.
The formalization of this agreement took place during the German-Nigerian Business Forum in Berlin on November 21, 2023.
This collaborative MOU signifies a joint commitment between Union Bank and BFREE to explore solutions for economic challenges. Under the terms of the agreement, BFREE, along with its international financing partners, will explore the potential acquisition of Union Bank’s distressed loan portfolios, with a prospective investment cap of $40 million. The primary focus will be on refinancing non-performing loan portfolios, especially those experiencing delays in repayment or already written off.
Union Bank, known for its significant lending to retail customers and Small & Medium Enterprises (SMEs) in Nigeria, has proactively adapted to the prevailing challenging economic climate. With economic pressures demanding increased flexibility for loan repayment plans, BFREE’s utilization of artificial intelligence (AI) presents an innovative solution.
BFREE’s AI-driven automated interaction with loan customers facilitates discussions and agreements on revised loan terms. This streamlined approach enables swift review of numerous loan agreements within short periods, resulting in higher repayment rates and reduced instances of loan write-offs for Union Bank. This strategic partnership positions Union Bank for enhanced financial resilience and alleviates the institution of managing low-performing loan portfolios.
President Tinubu’s active role in promoting Nigeria as a prime business and investment destination underscores collaborative efforts to attract international businesses. The expected surge in foreign currency inflow, particularly in USD and EUR, is anticipated to ease pressure on the Naira’s exchange rate, contributing to economic stability.
Joe Mbulu, Executive Director of Union Bank, highlighted, “We are excited about the strategic partnership with BFREE as it aligns with Union Bank’s commitment to innovation and adaptability. By leveraging BFREE’s advanced AI capabilities, we aim to enhance the efficiency of our loan portfolio management, ensuring flexibility for our customers in these challenging times.”
READ ALSO: Oshoala, Nnadozie shortlisted for 2023 CAF women’s player of the year
Julian Flosbach, CEO of BFREE, expressed enthusiasm, stating, “BFREE is thrilled to announce our strategic partnership with Union Bank, a collaboration that underscores our joint commitment to innovation and resilience in the face of economic challenges. Our proprietary AI capabilities will play a crucial role in streamlining Union Bank’s loan portfolio management, offering unparalleled flexibility to customers during these challenging times.”
Union Bank is optimistic that this strategic partnership with BFREE will not only bolsUter the bank’s financial health but also contribute significantly to the broader economic recovery of Nigeria.
