COMFORT EKELEME, Asst Business Editor
The Boards of Access Bank Plc and Diamond Bank Plc have said that the merger between the two banks will form a leading Tier 1 Nigerian bank and the largest bank in Africa by number of customers, spanning three continents, 12 countries and 29 million clients.
Access Bank equally affirmed that it has already finalized terms and obtained regulatory approvals for a Tier II capital issuance, which will raise $250 million, available for drawdown in January 2019. This is even as the board maintained that they have received “No Objection” from the Central Bank of Nigeria (CBN) regarding a potential merger between the two banks, which is expected to complete in the first half of 2019.
According to the board, transaction completion is subject to Access Bank and Diamond Bank obtaining shareholder and regulatory approvals which includes the CBN, Securities and Exchange Commission (SEC) Federal High Court (FHC) and the National Pension Commission (PenCom).
The signing of the Memorandum of Agreement and announcement of headline terms, which valued Diamond Bank at approximately N72.5 billion ($200 million), will see Diamond Bank shareholders receive NGN3.13 per share in cash and shares.
Briefing Newsmen in Lagos on the proposed merger, Chief Executive Officer of Access Bank, Herbert Wigwe, said “I am delighted to announce that we have received the necessary regulatory approvals to pursue a merger with Diamond Bank, one of Nigeria’s foremost digital and retail banks, subject to final regulatory and shareholder approvals. The combination of our two businesses will create the largest retail bank in Africa by customer base and a very significant player in the Nigerian market. This is a huge step towards the delivery of our goal to bring the power of banking to millions of people across Nigeria and an exciting transaction for Access Bank and Diamond Bank’s customers, staff and shareholders.
“We have a clear plan to maintain our capital strength and are announcing today decisive steps by both banks to ensure their financial stability throughout the process. The overall outcome will be a stable institution with an extremely strong capital adequacy ratio of more than 20per cent following completion of the merger, which will be a leading competitor in all the markets in which it operates.
“Access Bank and Diamond Bank have complementary operating platforms and similar values, and a merger with Diamond Bank, with its leadership in digital and mobile-led retail banking, will accelerate our ambition to become a leading corporate and retail bank in Nigeria and a Pan-African financial services champion. We look forward to bringing our discussions to a successful conclusion and delivering the benefits of the merger to our staff, customers, shareholders and other stakeholders.”
speaking Chief Executive Officer of Diamond Bank, Uzoma Dozie said “The merger is positive for all of Diamond Bank stakeholders, including customers, employees and shareholders.
“In particular, customers will benefit significantly through the unrivalled combination of the best of Diamond Bank’s retail and digital leadership with the size of Access Bank’s balance sheet, corporate names and geographical reach.
“In reaching this decision, the shared passion for leveraging Nigeria’s youthful and entrepreneurial talent and a commitment to better outcomes through financial inclusion has convinced us that this is the right combination.
“I believe that the combination of two strong and admired brands, with shared values and complementary strengths, will be a strong force for positive change in the Nigerian and African retail landscape. As a result, this merger creates significant potential for sustainable long-term growth which stands to benefit customers, employees and shareholders alike,” he said.
The board equally maintained that the SEC, CBN, PenCom regulatory approvals and FHC sanction is expected before end of H1 2019, while cost synergies conservatively estimated at N30 billion per annum, and pre-tax, to be fully realized within three years post-completion, and further revenue and balance sheet synergies to be evaluated by joint implementation committee.
Meanwhile, the pro-forma capital position of the merged bank will be in full compliance with regulatory requirements for significant financial institutions with an international banking presence.
However, in order to meet international standards of best practice and ensure a robust capital buffer, Access Bank and Diamond Bank have jointly agreed a strategic capital management plan and expect to achieve a post-completion Capital Adequacy Ratio (CAR) of 20per cent at the bank level and 22per cent at the Group level.The key elements are Diamond Bank to take further impairments in line with IFRS9, to be reflected in year end 2018 results.
Access Bank has also obtained “No Objection” from the CBN to undertake a Rights Issue to raise up to NGN 75 billion (~US$ 207 million) in H1 2019. Shareholder approvals and other regulatory approvals will be obtained before the offer opens. This accelerates the capital management plan to support retail growth, previously set out in the Bank’s five-year strategy
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