Union Bank of Nigeria and BFREE have signed a Memorandum of Understanding (MOU) to address economic challenges and revitalise distressed loan portfolios in Nigeria.

BFREE is a German FinTech start-up founded in 2020 and has developed a proprietary AI-first ethical credit collection process. BFREE has worked with more than 35 financial institutions in Nigeria, Ghana, and Kenya and has managed collection processes of over four million distressed retail customers with a cumulative distressed loan value of over $400 million.

Under the MOU which was formalised during the German-Nigerian Business Forum in Berlin on November 21, BFREE, in conjunction with its international financing partners, will explore the acquisition of distressed loan portfolios from Union Bank, with a potential investment cap of $40 million.

The key focus will be refinancing non-performing loan portfolios, particularly those delayed in repayment or already written off.

Union Bank, a leading provider of loans to Retail customers and Small & Medium Enterprises in Nigeria, has proactively adapted to the challenging economic environment which has necessitated increased flexibility for loan repayment plans, and BFREE, leveraging 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 the rapid review of many loan agreements within short periods, resulting in higher repayment rates and reduced instances of loan write-offs for Union Bank. It also demonstrates the Bank’s confidence in BFREE’s robust recovery process. This strategic partnership not only positions Union Bank for enhanced financial resilience but also relieves the institution of the burden of managing low-performing loan portfolios.

Union Bank is leveraging on President Tinubu’s active participation in promoting Nigeria as a prime destination for business and investment, underscoring collaborative efforts to attract international businesses. The anticipated increase in foreign currency inflows, particularly USD and EUR, is expected to alleviate pressure on the exchange rate of the Naira, contributing to economic stability.

Speaking about the partnership, Joe Mbulu, Executive Director of Union Bank expressed excitement about the strategic partnership with BFREE as it aligns with Union Bank’s commitment to innovation and adaptability.

“This collaboration signifies our dedication to finding innovative solutions to the economic challenges faced by our customers. 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. This partnership reflects Union Bank’s proactive approach to navigating the evolving financial landscape and reinforces our commitment to providing sustainable financial solutions to individuals and businesses in Nigeria”, he said.

Julian Flosbach, Chief Executive Officer of BFREE, expressed, “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. With a track record of successfully managing over 4 million distressed customers across Africa, BFREE brings extensive experience to the table. 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. The commitment of our financing partners is instrumental in driving this initiative, highlighting their dedication to supporting Union Bank’s revitalisation efforts.”

Union Bank is optimistic that this strategic partnership with BFREE will not only bolster the bank’s financial health but also contribute significantly to the broader economic recovery of Nigeria.

Established in 1917 and listed on the Nigerian Stock Exchange in 1971, Union Bank of Nigeria Plc. is a household name and one of Nigeria’s long-standing and most respected financial institutions. The Bank is a trusted and recognisable brand with an extensive network of over 300 branches across Nigeria. The Bank currently offers a variety of banking services to both individual and corporate clients, including current, savings, and deposit account services, funds transfer, foreign currency domiciliation, loans, overdrafts, equipment leasing, and trade finance. The Bank also offers customers convenient electronic banking channels and products, including Online Banking, Mobile Banking, Debit Cards,